ECONOMIC OUTLOOK OF TURKEY 2015, 18.2.2015
ECONOMIC OUTLOOK OF TURKEY
Turkey maintained and improved its macroeconomic stability over the last twelve years as a result of structural reforms in public financial management and control, banking sector, social security system, education and healthcare system. Turkish economy grew by 5 % on average between 2003-2014 and has been growing for 20 quarters consecutively. Turkey has succeeded to sustain robust economic growth in 2014 despite the turbulent political and economic Outlook around its neighborhood. Turkish economy grew by around 3% in 2014 and is expected to grow by 4 % in 2015. Placing confidence at the core of all economic policies and private sector driven growth have enabled Turkey to make great strides in economic development. Turkey became an upper middle income country in 2004 and tripled per capita income in USD terms compared to 2002. The purchasing power parity adjusted per capita income is more than 19.000 USD according to OECD.
Meanwhile, Turkey experienced a rapid integration process to the global economy. As the whole economy thrives, foreign trade activity of Turkey grew up at a remarkable pace as well. Its exports volume more than quadrupled from 2002 to 2014 and foreign trade volume as a share of GDP increased by more than 10 percentage points over the same period. In 2014 Turkish exports reached 157.7 billion USD, whereas imports declined to 242.2 billion USD. Structural reforms have improved the investment climate which in turn attracted Foreign Direct Investment (FDI). Legislation on investment was streamlined along global standards. At present Turkey has a more foreign capital-friendly legislation and transparent regulatory system. As a result, Turkey has managed to attract over $12.4 billion FDI per year on average during the last decade, compared to its level of $1 billion annually previously.
The significant decrease in the current account deficit is another achievement in Turkish economy. In 2014 the current account deficit of Turkey decreased by 30 % vis a vis 2013 and declined to 45,8 billion USD which corresponds to % 5,5 of GDP.
Budget deficit and public debt stock indicators of Turkey have been reduced to the levels below the Maastricht criteria. In 2014, the budget deficit/GDP ratio was 1.3 % and Turkey outperformed 21 European Union countries. EU defined gross consolidated government debt/GDP ratio of Turkey was 33 % in 2014, which was below the level of 25 EU Countries and the Maastricht Criteria. Turkey has also progressed well concerning the implementation of active labor market policies for employment, fighting poverty and improving income distribution to attain inclusive growth. 6 million new jobs were created after the economic crisis thanks to well-targeted labor market policies and the strong growth performance of the economy. Turkey also successfully reduced its income disparity in the last decade and has become one of the best performing countries in lowering the Gini coefficient among the OECD countries. With its strong commercial and financial linkages to the global economy, Turkey has come to be followed closely both in the region and on a global scale. Being an active member of G-20, Turkey assumed the G-20 presidency in 2015. During its presidency, Turkey will have an important role in determining and directing the international economic, financial and development agenda. Turkish Presidency priorities have been declared as three I’s, namely, Inclusiveness, Implementation and Investments. 10th Development Plan spanning 2014-2018 provides a long term perspective for the maintenance of prudential economic policies. As such it lies at the core of our reform agenda.
It includes 25 transformation programs and attendant action plans aiming at maintaining robust and sustainable growth, enhancing competitiveness, innovative production, reducing dependency on energy imports, increasing private savings, making the business and investment environment more attractive, accelerating research and development activities and innovation efforts. We have recently announced detailed action plans with specific deadlines for all these areas, totaling more than 1200 actions. Moreover, to ensure the implementation, a monitoring mechanism is under way. 3 yearly Medium Term Programmes first of which was announced in 2012, spell out the guidelines to maintain macro economic stability, ensure sustainable growth, strengthen competitiveness, reduce current account deficit, fight against inflation, increase domestic savings. Currently Medium Term Programme for 2015-2017 is in force. In accordance with the foregoing, the Turkish economy is predicted to grow by % 5 in 2015.
With this solid economic and financial background, Turkey has become the 18
th largest economy in the world and the 7th in Europe. Our goal is to become one of the biggest 10 economies in the world with 2 trillion USD GDP and 25.000 USD GDP per capita by 2023, the centennial of the Turkish Republic. Turkey’s firm economic performance is the best assurance for accomplishing the 2023 vision and ambitious economic targets.
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