The Turkish Economy

The largest industrial sector is textiles and clothing, which accounts for one-third of industrial employment; it faces stiff competition in international markets with the end of the global quota system. However, other sectors, notably the automotive and electronics industries, are rising in importance within Turkey's export mix.

Real GDP growth has exceeded 6% in many years, but this strong expansion has been interrupted by sharp declines in output in 1994, 1999, and 2001. The economy is turning around with the implementation of economic reforms, and 2004 GDP growth reached 9%, followed by roughly 5% annual growth in 2005-06. Inflation fell to 7.7% in 2005 - a 30-year low, but climbed back to 9.8% in 2006.

Despite the strong economic gains in 2002-06, which were largely due to renewed investor interest in emerging markets, IMF backing, and tighter fiscal policy, the economy is still burdened by a high current account deficit and high debt.

The public sector fiscal deficit exceeds 6% of GDP - due in large part to high interest payments, which accounted for about 37% of central government spending in 2004. Prior to 2005, foreign direct investment (FDI) in Turkey averaged less than $1 billion annually, but further economic and judicial reforms and prospective EU membership are expected to boost FDI.

Privatization sales are currently approaching $21 billion. Oil began to flow through the Baku-Tblisi-Ceyhan pipeline in May 2006, marking a major milestone that will bring up to 1 billion barrels per day from the Caspian to market.

Source: CIA World Factbook