Turkish economy Brief economic history Economic policies Main features of the economy Recent macroeconomic indicators Towards a new agenda

Brief Economic History Regular boom-and-bust economic cycles since the 1950s Excessive budgetary expenditures and chronic inflation Very high interest rates Major economic crises in 1994, 1998 and 2000-2001 Devastating 1999 earthquake and 2000-2001 crisis Turkey enjoyed regular boom-and-bust economic cycles since the 1950s. Excessive budgetary expenditures and chronic inflationary pressures were the norm. Very high interest rates Major economic crises in 1994, 1998 and 2000-2001. 1999 earthquake and 2000-2001 crisis devastated all sectors of Turkish economy and society.

Brief Economic History Signed a customs union with the European Union (EU) in 1995 Became a pre-accession candidate for EU membership at the Helsinki Summit in December 1999 Turkey signed a customs union with the European Union (EU) in 1995 and became a pre-accession candidate for EU membership at the Helsinki Summit in December 1999. Turkey officially started negotiations for full membership in October 2005, and has so far completed negotiations in the science and research chapter. The screening process for other chapters is in progress.

Economic Policies Open economy Capital flows are free No exchange rate restrictions for investors Modern Participatory democracy Full integration in Europe A critical role in its region An export-oriented, technology-intensive production structure Turkey is an open economy Capital flows are free No exchange rate restrictions for investors The Government's vision for the country is for a modern, participatory democracy with close ties to national history and traditions, full integration in Europe, a critical role in its region, and an export-oriented, technology-intensive production structure.

Economic Policies A tough IMF program Undercapitalized banks seized, shut down or privatized Energy and telecommunications’ markets liberalized Independent banking regulator created in 2001 Since 2001, Turkish governments implemented a tough IMF program. Undercapitalized banks seized, shut down or privatized. Number of banks slashed from 80 in 2000 to 48 in 2005. Energy and telecommunications’ markets liberalized. Independent banking regulator created in 2001.

Main features of the economy Population of 73 million GNP USD 363 billion and income per capita with USD 4,710 Long term average growth rate is about 5 percent Services and industry have shares of 64 percent and 23 percent Population of 73 million GNP USD 363 billion and income per capita with USD 4,710 Long term average growth rate is about 5 percent Services and industry have shares of 64 percent and 23 percent Source: World Bank

Main features of the economy Unemployment rate is about 10 percent Exports and imports amount to 90 billions and 127 billions, respectively. The main trade partner is the EU with 50 percent share Unemployment rate is about 10 percent Exports and imports amount to 76 billions and 116 billion, respectively. The main trade partner is the EU with 50 percent share Source: World Bank

Recent Macroeconomic Indicators Since 2002, impressive macro-economic performance Single-digit inflation after 35 years Source: World Bank

Recent Macroeconomic Indicators However, transformation also brings about some inherent risks However transformation also brings about some inherent risks Source: World Bank

Recent Macroeconomic Indicators Growth in recent years has been generating new jobs. But, it’s not been enough to lower unemployment rate. Declining share of agriculture Rising working age population Risk generating factors Source: Eurostat and Turkish Statistics Instutite

Recent Macroeconomic Indicators Significant increase in Foreign Direct Investment Decreasing total debt ratio Source: World Bank

Towards a New Agenda Picture is not bad at all However, Recent growth performance Macroeconomic stability A new and healthy incentive structure Global integration with also growing regional integration However, risks are serious and require competent management Current account deficit High unemployment There is an urgent need for a new agenda Setting the priorities, strategic action plans, effective delivery Managing the EU process as a mechanism to mitigate risks Building the required capacity for the new environment Reducing inequality through equitable human and social development Creating more and better jobs Macro economic policies in conjunction with a positive international environment led to economic performance to improve considerably since 2002. Disinflationary monetary and tight fiscal policies supported by some the structural reforms created an environment for higher growth led by the private sector. Capital inflow and foreign direct investment increased. The start of accession negotiations further reinforces the dynamism of Turkey to complete economic reforms enhancing Turkey’s integration with the EU.

Turkish economy Absolute independence can just come true by the aid of economic independence.. Kemal ATATURK Founder of Turkish Republic 1881-1938

Turkish economy THANK YOU… QUESTIONS??