Economic outlook of Turkey
Turkey has shown a tremendous growth in its GDP since the last decade. Between 2002 and 2016 it has shown a GDP growth of about 4%pa on average (see graph). From a meagre USD 3,500 in 2002, the per capita income has increased to USD 10,500 in 2011. This shows that the country is on an upward trend to an economic giant in a few years to come. In recent times, there was a global meltdown that caused recession in many parts of the developed world. Turkey was not left behind and it was also greatly affected. This slowed down the growth since there was a decline in foreign investments and earnings. However, this did not hold back the country for long, and the Turkish economy achieved a growth rate of 9.2% and 8.5% in the years 2010 and 2011 respectively. Projections for economic growth to 2017 put Turkey ahead of all EU zone and most of the BRICs (Brazil, Russia, India, China). Turkey today boasts of being the 17th largest economy in the world.
Some of the factors that have made the Turkish economy to remain stable include the much anticipated EU Membership. Sound financial and structural policies have been put into place as the country joins other European countries in the EU roundtable. This has increased efficiency, transparency and adherence to high standards of practise. And as these reforms are put into place, the economy continues to be stable and with a steady growth. Strong monetary policies by the Turkish central bank have also played a major role in stabilising inflation and also putting in place macro economic balances.
Turkish Government has also embraced strict fiscal discipline bringing down budget deficit from a high 17% in 2001 to 1.3% beating 23 EU countries in 2011. Foreign trade has also been a key instrument for the Turkish Government to grow the economy. Restrictions on imports have been uplifted while foreign exchange transactions were liberalised. This has tremendously increased Turkish exports to USD157 billion in 2013 from USD 36 billion in 2002.
OECD 2012 – 2017 Economic growth forecast
Foreign direct investments have also played a key role in uplifting the Turkish economy. Demographic factors including a younger population, highly learned labour force, tax incentives and a large domestic market have all made the Turkish economy to reach where it is today. The amount direct foreign investments by 2015 increased to USD 168 billion; this is a strong indication of investor confidence in Turkey.
Tourism has also been a big source for foreign earnings. Turkey boasts of a high number of tourists and has been attracting one of the highest tourists in the world. Natural beauties, reserved and unique historical attractions and a warm hospitality industry have all increased the appetite for tourism. In 2015, 30 million tourists visited the country realising foreign income in excess of USD 31 billion.
Privatisation and Turkish business abroad have also played a big role in improving the Turkish economic turnaround.