The Turkish economy has shown remarkable performance with its steady growth over the last decade
Economy of Turkey
The Turkish economy has shown remarkable performance with its steady growth over the last decade. A sound macroeconomic strategy in combination with prudent fiscal policies and major structural reforms in effect since 2002 has integrated the Turkish economy into the globalised world, while transforming the country into one of the major recipients of FDI in its region. As these reforms have strengthened the macroeconomic fundamentals of the country, the economy grew with an average annual real GDP growth rate of 4.7 per cent over the period of 2002 to 2014.
Moreover, Turkey’s impressive economic performance over the past decade has encouraged experts and international institutions to make confident projections about Turkey’s economic future. For example, according to the OECD, Turkey is expected to be one of the fastest growing economies of the OECD members during 2014-2016, with an annual average growth rate of 3.6 per cent.
Together with stable economic growth, Turkey has also reined in its public finances; the EU-defined general government nominal debt stock fell to 33.5 per cent from 67.7 per cent between 2003 and 2014. Hence, Turkey has been meeting the ’60 per cent EU Maastricht criteria’ for public debt stock since 2004. Similarly, during 2003-2014, the budget deficit decreased from more than 10 per cent to less than three per cent, which is one of the EU Maastricht criteria for the budget balance.
The visible improvements in the Turkish economy have also boosted foreign trade, while exports reached US$ 158 billion by the end of 2014, up from US$ 47 billion in 2003. Similarly, tourism revenues, which were around US$ 14 billion in 2003, exceeded US$ 34.3 billion in 2014.
Significant improvements in such a short period of time have registered Turkey on the world economic scale as an exceptional emerging economy, the 16th largest economy in the world and the sixth largest economy when compared with the EU countries, according to GDP figures (at PPP) in 2013.
- Institutionalised economy fueled by US$ 144 billion of FDI in the past decade
- 16th largest economy in the world and sixth largest economy compared with EU countries in 2013 (GDP at PPP, IMF-WEO)
- Robust economic growth with an average annual real GDP growth of 4.7 per cent during 2002-2014
- GDP reached US$ 800 billion in 2014, up from US$ 305 billion in 2003
- Sound economic policies with a prudent fiscal discipline
- Strong financial structure resilient to the global financial crisis.
Agriculture and Food
With its favourable geographical conditions and climate, Turkey is considered to be one of the leading countries in the world in the field of food and agriculture. The restructuring efforts that began in the early 1980s, alongside a series of reforms including privatisations and the reduction of trade barriers in the agriculture sector, resulted in a domestic market that is an integral part of the world economy today.
Turkey has a population of 76 million people and is growing with rising income levels. This makes Turkey one of the largest markets in its region, and the changing consumer habits of the younger generation boost domestic consumption.
Consequently, Turkey’s food industry has registered steady growth in recent years, with Turkish consumers becoming increasingly demanding, driven by the multitude of choices offered by mass grocery retail outlets. Rising disposable income and changing consumption patterns, along with the increase in the number of females in full-time employment, have all led to an increase of interest in packaged and processed food, such as ready-to-eat meals and frozen food.
Turkey is the world leader in the production of dried figs, hazelnuts, sultanas/ raisins and dried apricots. It has the largest milk and dairy production in its region. In addition, Turkey has an estimated total of 11,000 plant species, whereas the total number of species in Europe is 11,500.
While Turkey is becoming one of the largest markets for baked goods with its bread – an important element of the Turkish diet – subsector dairy products including milk, yoghurt, cheese, kefir and ayran (a drink made of yoghurt and water) form an integral part of the traditional Turkish diet.
Traditionally, artisan, unpackaged products have dominated the Turkish dairy market, holding back widespread growth but also offering potential to investors.
In addition, Turkey’s food industry is much better developed than that of neighbouring countries. Given these factors, the country is one of the largest exporters of agricultural products in the Eastern Europe, Middle East and North Africa (EMEA) region, while its trade balance is significantly positive. With growing exports, the Turkish agrofood industry has recorded US$ 5.6 billion of trade surplus in 2014.
Turkey offers a set of enablers for potential agrofood investors; the Turkish government’s support mechanism includes favourable regulations, tax structure, competitive labour force and investment incentives.
Turkey offers significant investment opportunities especially in the agribusiness subsectors such as fruit and vegetable processing, animal feed, livestock, poultry, dairy and functional food, aquaculture, and enablers (in particular cold chain, greenhouse, irrigation, and fertiliser).
As part of its targets set for the agriculture sector, by 2023, Turkey aims to be among the top five producers globally. Turkey’s vision for 2023 envisages other targets including:
- US$ 150 billion gross agricultural domestic product
- US$ 40 billion agricultural export
- Becoming one of the top five countries in terms of agricultural production
- 8.5 million hectare irrigable area (from 5.4 million)
- Ranking number one in fisheries as compared with the EU.