Turkey Economy

Turkey ranks 18th in the world by nominal GDP with $820.827 billion in 2013 and 61st by purchasing power parity (PPP) with $1.426 trillion. Turkey is a newly industrialized, developed nation according to the CIA.

Turkey is one of the world’s leading agricultural producers. Its economy also has strong production of ships and other transportation equipment, construction materials, consumer electronics, and home appliances.

Turkey ranks 18th in the world by nominal GDP with $820.827 billion in 2013 and 61st by purchasing power parity (PPP) with $1.426 trillion. Turkey is a newly industrialized, developed nation according to the CIA.

Turkey is one of the world’s leading agricultural producers. Its economy also has strong production of ships and other transportation equipment, construction materials, consumer electronics, and home appliances.

Turkey is a member of the G-20, Organization of Economic Co-operation and Development (OECD), the World Trade Organization (WTO), and the Economic Cooperation Organization (ECO).

Economic History

Inhabitants have roamed the region now known as Turkey from the earliest days of human kind’s migration into Asia and Europe. Located in Asia Minor, the area was in the heart of the Persian Empire during the classical era. Its geography allowed for many port cities, thriving trade, and the immense growth of wealth.

This made it a key target for Macedon when much of the known world was under the leadership of Alexander the Great. A few centuries later, the area fell under the rule of the Roman Empire and eventually Byzantium after the Roman Empire split. With the decline of Byzantium following the crusades, the area eventually came under the control of the Ottoman Turks around 1326.

Throughout these transfers of control, the region remained a critical crossroads for international trade. However, as the Turks took possession of the region, the culture of the area changed. The Turks, who began to dominate the area, descended from a nomadic and belligerent people. In the early years of the Turkish control, the Turks often were warring with neighboring groups on a regular basis. Yet, the longer their rule persisted, the more civilized the area became. The Turks were Muslim, but very tolerant of other cultures, allowing the region to become a fusion in the ancient world. This allowed for overseas trade with much of the world, whether Muslim, Christian, or Jewish.

The Ottoman Empire was one of the most successful and long lasting nations in history. It inherited a great deal from the Byzantine Empire that preceded it in the region, and some historians even tie the two cultures together as a single nation. However, the cultures were quite distinct. Although the Ottoman Empire tolerated all faiths and even served as the home for what is now Greek Orthodox Christianity, it often found itself at war with neighboring Catholics. The Ottoman Empire also supported corsairs that dominated the Mediterranean and eventually conquered the Barbary Coast. This gave the Ottoman Turks a stake in virtually all trade occurring over the sea in the region.

During the 16th century, the nation began an epic architectural boom, the evidence of which still stands in many locations around modern day Turkey. The vast wealth flowing through the region reflects in the elegance of these structures and the intricacy of the architecture. Yet the nation remained in a state of almost constant conflict with Persia to the south, Austria/the Holy Roman Empire to the west, and, by the 17th century, Russia to the north. Throughout much of the 18th century, the Ottomans were at war with the Russians, who wished to lay claim to the Ottoman Empire’s prosperous Black Sea ports.

Thus, by the 19th century, enfeebled by centuries of near constant conflict, the leadership of the nation had weakened and the military resources had grown tired. Although the constant flow of trade through the region kept it quite wealthy, this same wealth made it a perpetual target. As other nations of the world began their own empire building in the 19th century, this nation at the crossroads of the world became an obvious target. Rather than risk further conflict with increasingly stronger and more technologically advanced foreign powers, the Ottoman Empire began a new method of diplomacy. Several agreements ensured the freedom of shipping passage through the Mediterranean and across portions of the Ottoman territory.

Unfortunately, the region remained too tempting a target for international forces, and the result was the Crimean War. At the end of the war, Russia’s position in the region greatly weakened, but the Ottoman Empire never fully recovered. A series of efforts at government reforms and coups resulted in inept leadership. The Balkans war further eroded the nation’s hold on its own territories, particularly in the European region. Therefore, by 1908, a bloodless coup resulted in a democratically elected, constitutional government in Istanbul. However, this young democratic state’s tenure would not last long, as the beginning clashes of World War I erupted just a few years later.

At the time of the collapse of the Ottoman Empire and the formation of the Turkish Republic, the local economy was grossly underdeveloped. Buoyed for centuries by trade, the local economy remained largely agricultural and industrialization had not yet taken root in the area. After the war, as new technology made its way into the region, agricultural output greatly expanded, and Turkey became one of the great breadbaskets of the world. The nation maintained armed neutrality during World War II, but this greatly depleted the nation’s remaining wealth stores and harmed the overall economy.

Thus, following the Second World War, Turkey was a nation transformed. It was a democratic state slowly beginning to industrialize but facing huge financial problems. Sharp periods of expansion lead to over-importation and a resulting trade deficit that crashed the economy once more. By the 1970s, the nation teetered on the brink of total ruin.

In the 1980s, the nation adopted a new approach, in which export profits funded import purchases, to international trade. This helped eliminate trade deficits and strengthened the overall Turkish economy. Unfortunately, the rapid growth caused by these measures could not overcome high unemployment and rapid inflation. The nation suffered further economic harm with the outbreak of the Persian War. However, the growth of the Turkish economy in the 1980s improved the nation’s overall credit rating, making it possible to attract foreign aid and investment following the war. By the mid-1990s, Turkey had begun a period of economic growth and stabilization that would see vast improvement in per capita incomes, a leveling of inflation, and an overall modernization of the region.

Current Economic Situation

While shaken by the Global Recession of 2008, the nation felt the effects far less than most of the rest of the world. In fact, in 2010 Turkey posted economic expansion figures of 9.2 percent and 8.5 in 2011, making it the fastest growing economy in Europe and one of the fastest in the world. Most analysts now label the nation developed and newly industrialized, while a few still rate it as an emerging economy.

Agriculture remains an important part of the Turkish economy, accounting for approximately 8.9 percent of GDP and 25.5 percent of employment. Industry makes up 27.3 percent of GDP and services, as with most modern nations, accounts for the largest portion of the economic output at 63.8 percent.

Turkey is the world’s largest producer of hazelnuts, cherries, figs, apricots, quinces, and pomegranates.  The list of food stuffs produced is long and it is near the top for most globally consumed foods.  It is the second largest producer of watermelons, cucumbers, and chickpeas.  It is the third largest producer of tomatoes, eggplants, green peppers, lentils, and pistachios.  In addition, it is the fourth largest producer of onions and olives, the fifth largest producer of sugar beets.  The country boasts being the sixth largest producer of tobacco, tea, and apples; the seventh largest producer of cotton and barley; the eighth largest producer of almonds; the ninth largest producer of wheat, rye, and grapefruit; and the tenth largest producer of lemons. Moreover, the nation has remained self-sufficient in food production since the mid-1980s.

The main industrial output products of Turkey include textiles, food processing, automobiles, electronics, tourism, mining (coal, chromate, copper, and boron), steel, petroleum, construction, lumber, and paper. Perhaps not surprisingly given its location at the crossroad between Europe, Asia, and Africa, travel and telecommunications dominates Turkey’s services sector. Turkish banking also ranks among the strongest and most expansive in Europe, the Middle East, or Central Asia.

Economic Forecast

According to the OECD, recent political upheavals in the dominant ruling party, as well as talks about changing the system of government from parliamentary to presidential have created a bit of uncertainty in Turkey’s economy. Without a stable and certain government, economic confidence has waned and performance has become lackluster over the last several quarters. Thus, expansion expects to reach only 3.2 percent by the end of 2015 and 3.7 percent by the end of 2016.