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Turkey's economy

From the "sick man upon the Bosphorus" to one of the strongest growing markets in the world

Whilst in Germany the public perception of Turkey is focussed more on the hotly discussed negotiations on its entry into the EU, or maybe also on the problems involved with the integration of citizens of Turkish origin, Turkey has been continuously developing into an enormous growth market and industrial location since the 1980s. Because of the growing prosperity, more and more businesses are in the meantime discovering Turkey not only as an inexpensive location for purchasing, but also more and more as an important sales market.

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Enormous growth

Turkey’s economic development since the turn of the millennium has been impressive. With an increase in the Gross National Product (GNP) of 9.9 per cent in 2004, growth rates of 7 per cent on average up until the 2009 crisis, and a forecast growth rate of 5 per cent on average, Turkey is clearly better than the average of the European industrial nations and the OECD countries.
In 2006, this dynamic growth led to a record exchange of trade of 23.5 bn Euro between Germany and Turkey. Turkey has registered a continuous increase in companies with German participation - to more than 2,600 in 2007.Turkey seems to be emerging unscathed from the global financial and economic crisis in 2009. The restrictive banking system in Turkey prevented risky investment abroad.


  • 9.9 % growth in 2004
  • More than 2,600 companies with German participation in 2007
  • Record exchange of trade with Germany of 23.5 bn Euro

Turkey is a member of the G-20


Entry into the top ten is forecast for 2010

Economic policies

The positive development of the Turkish economy was supported by a comprehensive reform program by the Turkish government. Worth mentioning are the liberalisation efforts of Turgut Özal’s government in the eighties and the consistent stabilising and reform policies of this latest government. These activities have led to a distinct capital inflow from abroad.

Although foreign investments have slowed from ca. 22 billion in recent years to almost 10 billion in 2009, it is forecast that the lack of willingness to invest during the crisis year will change from 2010 onwards.
With continued stability, Turkey will develop into one of the ten most important trade partners in Europe and especially for Germany by 2015.
The excellent economic ties to the Russian Federation, to the Turk states of the former Soviet Union and to the countries in the Middle and Near East make Turkey an important platform for global competition.

Economic structures

Even today, Turkey’s economic situation is characterised by contrasts.
There is a very large rift between the industrialised west and its modern industry (especially in the large cities) on the one hand, and the agrarian structured and less well developed east on the other hand.


The greater Istanbul area has, for instance, 41 % of the average income of the 15 erstwhile EU countries, whereas the east reaches only 7 %.
Apart from that there are considerable structural problems within the Turkish economy. Agriculture only contributes 11.9 % to the GNP, however, it accounts for 30.6 % of the workforce. Industry contributes 29.6 % to the GNP and the services sector 58.5 %. 19.3 % of the working population are employed in industry and 44.5 % in the service sector. Diverse projects, among others the large dam projects (south-east Anatolia project GAP) should help the east to develop better in the future. A customs union between Turkey and the EU has been in force since 1996 (51.6 % of the exports are to the EU, 46 % of the imports originate in the EU).

Continuing inflation andnational debt

Economic problem areas

Turkey has only been able to reduce its chronic inflation in the new millennium.
Inflation reached at times almost hyper-inflationary numbers (1994/1995 is was 150 % in some quarters), in 2003 it fell to 18.4 %; according to estimates it amounted to ca. 9.4 % in 2004. On 1 January 2005 the old Turkish Lira was replaced by the new Turkish Lira (Yeni Türk Lirası). Through that, the Turkish Lira lost 6 noughts. Besides this, the  sub-unit of the Lira, the Kuruş, was re-introduced.

A further economic challenge for Turkey is the high national debt.
In relation to the GNP, it stood at 63,9 % (in 2006). Net new borrowing has, however, been strongly reduced in recent years and in 2006 brought down to almost zero. In recent years, the budget balance (in % of the GNP) was as follows: 2003: -11.3; 2004: -7.1; 2005: -2.0; 2006: approx. -1 (estimate).


The most important economic sectors are the textile industry, tourism, the automobile industry and electronics. Investments from foreign companies in Turkey are ca. 4.6 bn Euro (2002), with 3.3 bn from Germany alone.
In 2002, 5,129 foreign limited companies were active in Turkey, most of them from EU countries. In 2005, the state earned 20 bn $ through the privatisation of state-owned companies.

Turkey as a sales market

The leaders among the industries exporting to Turkey are mechanical engineering, automobile suppliers and chemical companies. Turkey also offers interesting perspectives for companies in the areas of electrical engineering and environmental technology. Turkey is, however, in no way only interesting for the manufacturing industry. Especially service providers, suppliers of information and communication technology as well as logistics of all kinds are offered multifaceted growth opportunities due to Turkey’s increasing “Europeanisation”. The opportunities for German companies for supplies and services have increased tremendously.

Interrelations with Germany and Europe

Germany and Turkey are economically very closely intertwined:  More than 3,600 German companies are investing in Turkey, more than 40 % of those have been founded in recent years. Almost three million people of Turkish descent live in Germany. With their commitment they have developed from their origins as guest workers into hosts for German work; 65,000 entrepreneurs of Turkish origin employ almost 350,000 people and generate more than thirty billion Euro.

Turkey’s economic growth and the strong interrelations with Europe seem not to be held back by issues that need to be settled politically. Solutions to the EU question, the problems of minorities, the Armenia conflict which has been carried out on the world’s stage as well as the current combat against terrorism would further strengthen Turkey’s economic position.

The national implementation of  binding guidelines with regard to a possible entry into the EU increases the transparency and legal security of all business relations with Turkey. For European companies this is one more reason to take a closer look at the Turkish market which is showing sustainable boom-growth and much promise for the future.

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