Economy of Turkey

By | May 11, 2022

According to estimates, Turkey’s GDP in 2002 at purchasing power parity of currencies was $468 billion, GDP per capita was $7,000. GDP and GDP per capita at the current exchange rate in 2001 were $147.7 billion and $2,124, respectively. According to the World Bank classification, Turkey belongs to the subgroup of low-income countries and ranks 27th in the world in terms of GDP.

According to cheeroutdoor, 34% of the total number of employed (approx. 24 million people) is in agriculture, 19% in industry and 47% in the service sector (2002).

In the sectoral structure of GDP production, the services sector 66% and industry 21% were in the lead, the share of agriculture was 13% (2001).

In the 1990s the change in the ratio of the main industries in terms of the cost of production was not too significant: the manufacturing industry was invariably in the lead with the share of St. 80%, the share of the extractive industry was approx. 5%, the rest accounted for energy, gas and water supply.

Although the food industry (13%), textile (12%), oil refining (12%) and chemical industry (11%) remained leaders in the sectoral structure of the manufacturing industry in terms of added value, transport engineering (7%) reached a significant share, ferrous metallurgy (5%), electrical engineering (5%), clothing industry (4.5%).

In the structure of agriculture, the leading industry is crop production, which provides approximately 2/3 of the total income of the industry, followed by animal husbandry. The area of cultivated land exceeds 28 million hectares. The main problem in land ownership remains the maintenance of a large number of small farms with very low efficiency indicators. Therefore, for Turkey, the question of the forms and amounts of state support for the agricultural sector is very important, which are now changing significantly under the urgent recommendations of the IMF.

Of paramount importance in the structure of crop production is the cultivation of cereals, for which approx. 80% of cultivated areas. A significant place in the structure of agriculture belongs to the cultivation of industrial crops (cotton, sugar beets, sunflowers, tobacco, and tea). Important export sectors are fruit growing, vegetable growing and floriculture.

The total cost of transport and communication services in 2001 amounted to almost 16% of the value of GDP. The total length of railways is 8607 km, roads 382.059 thousand km. 1738 km of oil pipelines transporting crude oil, 2321 km of pipelines pumping oil products, 708 km of gas pipelines pass through the territory of Turkey. The largest ports in Turkey are Istanbul, Izmir, Mersin (Ichel), Iskenderun, Izmit (Kocaeli), Samsun, Trabzon, Hopa. In 2001, 120 airports operated in Turkey. The total volume of passenger traffic in 2001 amounted to 209.6 million passenger / km, and freight traffic – 721.8 tkm.

In 1999, there were 19.5 million telephone lines in Turkey. In 2001, the country used St. 17 million mobile phones. Number of Internet users 2.5 million people. (2002).

Wholesale and retail trade services were provided in 2001 by approx. 18% of the value of GDP. In the system of wholesale trade, the most important place belongs to commodity exchanges. The largest volume of transactions in 2001 was carried out on the Istanbul, Izmir and Konya stock exchanges. In total, in the system of wholesale and retail trade in Turkey, St. 700 thousand enterprises, which employed St. 1.8 million people (1997).

In 2001, the country was visited by approx. 11 million tourists. The country’s net income from tourism (excluding spending by Turkish tourists abroad) has exceeded $6 billion.

From the beginning 1980s Turkey carried out stabilization measures aimed at reducing the deficit in the public finance system. At the same time, much attention was paid to encouraging industrial exports in order to improve the balance of current operations in the balance of payments. A certain inconsistency that was observed in the implementation of this policy after coming to power in con. 1983 civil government T. Ozal, not allowed to cope with the problem of inflation. After the parliamentary elections of 1988, the government of the Fatherland Party, which remained in power, took the path of tightening fiscal policy, but the stable inflationary expectations of economic agents that had formed over the previous years of its rule led to that the efforts of the authorities to curb the growth of the money supply plunged the country’s economy into a state of stagflation. This circumstance, along with the accumulation of costs of the export-oriented growth policy, forced the government to take the path of stimulating fiscal policy, which meant strengthening the role of the domestic market in ensuring economic growth. After almost a decade of continuous decline, real wages began to rise, accompanied by a noticeable increase in the share of current expenditures in the budget structure. Gradually, the ratio of the budget deficit to GDP also increased. However, the “overheating” of the economy made it possible to ensure fairly high growth rates until 1994, when the monetary and financial crisis broke out. The growth of budget deficits led to an increase in the borrowing activities of the state in the domestic and foreign markets. As the state debt grew, its short-term structure-forming debt increased, which made servicing the state debt even more expensive. Finally, in view of the dangerous increase in the share of interest payments in the structure of budget expenditures, the state announced a decrease in the yield on its securities. As a result, “hot” money, which played a significant role in financing budget deficits, rushed out of the country, which led to the inevitable devaluation of the Turkish lira. Consistent implementation of stabilization measures after the crisis of 1994 was difficult due to the instability of the political situation in the country. The actual launch of more successful IMF-assisted stabilization programs was at stake. 1990s However, the amount of accumulated public debt

In the 1st floor. 2000 Turkey managed to achieve notable success in the fight against inflation: the increase in wholesale prices for January-April amounted to 16.2% (the lowest level for the same period over the previous 13 years). The partially achieved stabilization of the financial market was disrupted by disagreements in the power structures, which had negative consequences for the socio-political sphere. As a result, society once again lost confidence in the ongoing stabilization program, and the Turkish lira began to be subjected to massive attacks. On February 19, the demand for dollars reached $7.6 billion, as a result of which the Central Bank announced a transition to a floating exchange rate, which was tantamount to an uncontrolled devaluation.

In 2001, the IMF loan assistance exceeded $10 billion, which played an important role in overcoming the consequences of a new monetary and financial crisis. A $16 billion loan assistance to Turkey is planned for 2002-04. The main directions of Turkey’s stabilization program are: cuts in government spending as a result of making public finances more compact and more easily controlled, which will increase the transparency of government spending; further implementation of the tax reform aimed at expanding the tax base and eliminating the use of all kinds of tax benefits; ensuring the specified volumes of the primary surplus of the state budget (i.e. the ratio of budget revenues and expenditures before the implementation of interest payments on the public debt);

According to the results of 2001, the ratio of the consolidated budget deficit to GNP was almost 16%, and the total deficit of the entire system of public finances to GNP was 16.5%. The GNP deflator was 55.3 in 2001 and 34.5 in 2002. The country’s external debt, which has grown significantly in recent years, is at stake. 2002 was estimated at $131 billion, of which central government debt accounted for approx. 57 billion dollars. The ratio of domestic public debt to GNP was as of late. 2001 ok. 70%. According to official statements, in 2003 the Turkish government will have to repay $82bn of domestic debt and $11.4bn of external debt. Under the conditions of the post-crisis development of the economy, the unemployment rate, which in 2001 was 8.5%, rose in 2002 to 11.4%. In addition, Turkey has a rather high level of underemployment,

The prospects for financial stabilization began to be assessed more positively after the last in Turkey in con. 2002 parliamentary elections and the coming to power of a one-party government formed by the Justice and Development Party.

Implementation with con. 1990s financial stabilization was marked by the strengthening of the status of the Central Bank of the Republic of Turkey (CBTR). It was assumed that with the increasing role of monetary policy, the Central Bank’s control over the level of inflation would require the expansion of its independence, as well as its legislative registration. In con. In April 2001, it was planned to adopt a new law on the CBTR, aimed at increasing its independence. Monetary and financial crisis early. 2001 updated its use of a contractionary monetary policy and accelerated the adoption of a new law on the CBTR, which entered into force on May 4, 2001. In accordance with it, the relationship between the CBTR and the executive branch is limited only to the obligation to first provide the Council of Ministers twice a year – in April and October – a report on the current and planned monetary policy. In addition, twice a year, the CBRD must inform the planning and budget commissions of the parliament about its activities. The CBTR must also communicate to the public the objectives of its monetary policy and the means to achieve them. The new version of the law does not provide for the provision of loans by the CBTR to the treasury or other state structures and organizations. In connection with the noted changes in the activities of the Central Bank of the Republic of Belarus in 2001, the increase in the money supply decreased to 43%, while in con. 1990s it was at least 100% per year.

The Turkish commercial banking system includes St. 80 banking institutions – both public and private. The last group includes foreign banks. Turkey’s banking system is in a difficult position. It was the result, first, of the weakening during the 1990s. the structure of banking assets and the narrowing of the client base in the context of switching mainly to operations with government securities; secondly, difficulties in restructuring banks in the conditions of financial stabilization that began in 2000 and a decrease in bank interest; thirdly, the last monetary and financial crisis of 2001. A special kind of difficulties are experienced by state-owned banks, which have significant specific losses associated with financing the socio-economic policy of the state. As a result, the state has to prevent the increasing number of bank failures by transferring the respective banks to the Deposit Insurance Fund. The Fund, in turn, makes decisions on the consolidation and strengthening of banks through mergers. Similar measures are used in relation to state-owned banks. In addition, the possibility of privatization of the latter is also being considered. Total assets of Turkish banks at stake. 1990s were estimated at $133.5 billion, or 72% of GDP.

The expansionary fiscal policy pursued in Turkey throughout much of the 1990s led to a marked rise in real wages. According to World Bank estimates, the average annual cost of labor per worker in Turkey in 1995-99 was approx. 8 thousand dollars against 14 thousand dollars in Brazil, 16 thousand in Greece, 33 thousand in Germany, 36 thousand in Italy.

Between 1995 and 1999, the average annual value added per person employed in the Turkish manufacturing industry was approx. 33 thousand US dollars. Compared to the beginning 1980s this figure increased by approximately 2.5 times. However, Turkey still lagged far behind in terms of labor productivity in the manufacturing industry from developed countries such as the United States, where in the 2nd half. 1990s per employee, added value was created in the amount of 81 thousand dollars, Germany – 80 thousand dollars. At the same time, it was at a level close to Argentina (37 thousand dollars), Chile (33 thousand dollars), Israel (36 thousand) and Greece (30 thousand). The gap in wages compared with developed countries was many times ahead of the gap in labor productivity,

Income inequality in Turkey is characterized by a very high Gini coefficient of 42. The 10% of households with the lowest incomes account for 2% of total disposable household income, while the 10% with the highest incomes account for 32%.

Turkey’s exports in 2002 amounted to 37.6 billion US dollars and imports to 43.9 billion US dollars. The country’s foreign trade is chronically deficient. Main export articles: textile and clothing products, ferrous metallurgy and food industry products, motor vehicles. Turkey imports mainly raw materials, including fuel, investment goods and intermediate products. Turkey’s main trading partners in 2001: in terms of exports – Germany (17%), USA (10%), Italy (7.5%), UK (7%), France (6.0%), Russian Federation (3%) ; imports – Germany (13%), Italy (8.4%), Russian Federation (8.3%), USA (7.9%), France (5.5%), UK (4.6%).

Economy of Turkey