Turkey

Turkey's dynamic economy is a complex mix of modern industry and commerce along with a traditional agriculture sector that still accounts for about 25% of employment. It has a strong and rapidly growing private sector, and while the state remains a major participant in basic industry, banking, transport, and communication, this role has been diminishing as Turkey's privatization program continues. 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 and have surpassed textiles 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. Due to global economic conditions, GDP fell to a 0.9% annual rate in 2008, and contracted by 6% in 2009. Inflation fell to 5.9% in 2009 - a 34-year low. Despite the strong economic gains from 2002-07, which were largely due to renewed investor interest in emerging markets, IMF backing, and tighter fiscal policy, the economy has been burdened by a high current account deficit and high external debt. Further economic and judicial reforms and prospective EU membership are expected to continue boosting foreign direct investment. The stock value of FDI stood at more than $180 billion at year-end 2009. Privatization sales are currently approaching $39 billion. Oil began to flow through the Baku-Tbilisi-Ceyhan pipeline in May 2006, marking a major milestone that will bring up to 1 million barrels per day from the Caspian to market. Several gas pipelines also are being planned to help move Central Asian gas to Europe via Turkey. In 2007 and 2008, Turkish financial markets weathered significant domestic political turmoil, including turbulence sparked by controversy over the selection of former Foreign Minister Abdullah GUL as Turkey's 11th president and the possible closure of the Justice and Development Party (AKP). Turkey's financial markets and banking system also weathered the 2009 global financial crisis and did not suffer significant declines due to banking and structural reforms implemented during the country's own financial crisis in 2001. Economic fundamentals are sound, but the Turkish economy may be faced with more negative economic indicators in 2010 as the global economic slowdown continues to curb demand for Turkish exports. In addition, Turkey's relatively high current account deficit, uncertainty related to policy-making, and fiscal balances leave the economy vulnerable to destabilizing shifts in investor confidence....  More..