Turkey: an overview

A Turkish flag at the 2008 Beijing Olympics. Credit: Getty Images

Turkey is a rapidly developing country with a dynamic national economy, the largest in central and eastern Europe. This is a complex mix of modern industry and commerce along with a traditional agricultural sector that still accounts for as much as 30 per cent of employment. Turkey has a strong and rapidly growing private sector, yet the state remains a major participant in basic industry, banking, transport and communications.

After the country experienced a severe financial crisis in 2001, it adopted financial and fiscal reforms as part of a programme introduced by the International Monetary Fund. This strengthened its economic fundamentals and ushered in an era of strong growth. Turkey’s well-regulated financial markets and banking system weathered the global financial crisis and GDP rebounded to 7.3 per cent in 2010 as exports returned to normal levels following the recession.

However, the economy continues to be burdened by a high current account deficit and remains dependent on often volatile short-term investment to finance its trade deficit. Indeed, the account deficit, uncertainty related to policymaking and fiscal imbalances leave Turkey’s economy vulnerable to destabilising shifts in investor confidence.