By Ayesha Villalobos
Starting in the 1950s, Turkey suffered a period of vibrancy and gloomy economic cycles. These were supplemented by political crises that led to interruptions in the democratic system in 1960, 1971, and 1980. The import-substitution strategy of the 1960s and the 1970s had brought lengthy overdependence on imports and foreign borrowing. The aftermath of the oil crises of 1974 and 1979, Turkish governments had also confronted severe foreign exchange deficits, leading to preventive rationing of some.
The preconceived customs union was implemented in over 1996-2001, creating trade in industrial goods unrestricted from tariffs and quotas. Turkey has also pursued EU economic policy in the direction of various third parties, thereby allowing restricted tariffs to countries in Central and Eastern Europe, the Middle East and North Africa and the signatories of the Lomé Convention. Evidently, this history is significant in order to understand on how did Turkey evolved as an emerging economy in the world.
The Turkish government has declared insistently about how its economy is robust than many in Western Europe, and Turkey did not succumb to bail out its banks. Turkey initiated agonizing economic and financial reforms in 2001, despite the chronic instabilities of Turkish economy in that year; the economy has proven resilient and thriving in the current recession, especially compared to the many Western economies who have suffered financial meltdowns.
Turkey with its estimated 79,749,461 (CIA World Fact book July 2012 est.) population stands as the 17th among the 238 countries in the world. A closer exploration of the population can show its young and dynamic nature that is considered as an important factor of Turkish power. The reforms strengthened the country's economic fundamentals and ushered in an era of strong growth – averaging more than 6% annually until 2008. Global economic conditions and tighter fiscal policy caused GDP to contract in 2009, but Turkey's well-regulated financial markets and banking system helped the country weather the global financial crisis and GDP rebounded strongly to 8.2% in 2010, as exports returned to normal levels following the recession. They are meaningful to show that Turkey, as defined by World Bank: as an emerging economic power.
Turkey’s export partners include France, Germany, Iraq, Italy, and the UK. Turkey exports textiles, apparel, foodstuffs, manufactures, and transport equipment. Turkey’s import partners include Russia, Germany, the US, China, France, Italy, and, despite economic sanctions, Iran, from which Turkey receives substantial petroleum, keeping Iran’s oil industry alive and functioning. Turkey’s main import commodities include chemicals, fuels, machinery, goods (unfinished), and transport equipment.
Turkey's public sector debt to GDP ratio has fallen to roughly 40%. While the anticipated growth rate was 6.5% .But according to the Turkish Statistics Institution, the Turkish economy grew 8.8% in the second quarter of 2011. Considering the ruling prices, the gross domestic product reached 318 billion 910 million TL with a 19.2% rise in the second quarter of the year in comparison to the previous year. In deflating prices base, the Turkish economy reached 27 billion 910 million TL in same period. Turkey broke a world record in the first quarter with an 11% growth rate. Turkey showed that it is one of the fastest growing economies in the world with 8.8% growth rate.
While the International Monetary Fund forecasts a slowdown to 2.5% real GDP growth for Turkey in 2012, following growth of about 7.5% this year. The IMF has been wrong before. It made a conservative forecast of 3.7% growth in 2010 and fell far short of the mark; Turkey had 9% growth that year. Turkey has been attracting vigorous foreign interest. In the first eight months of 2011, foreign direct investment inflows increased 96% over the same period in 2010—to more than $10 billion.
As the world economy recovers, Turkey will attract more investment proof of that was the recent visit of General Electric (GE) Corporation Vice President John Rice in Istanbul. GE will make investments worth 900 million USD in Turkey in the next three years. GE focused on possible investments in aviation, energy, health, transportation and infrastructures. Also The State Oil Company of Azerbaijan (SOCAR) intends to invest about $10 billion in projects in Turkey in the next seven or eight years , Azeri oil giant to invest $10 bln more in Turkey. Meanwhile, Intel Capital also opens office in Turkey. Intel Capital has already been investing in the region since 2005. The two most recent investments in Turkish companies include Nokta, Turkey’s third largest digital media company, and Grupanya, a leading social commerce company. Intel Capital is the first Silicon Valley investor to open an office in Turkey, capitalising upon a solid track record in the region.
Furthermore, In a report by the “Retail Sector Assessment" prepared by Deloitte Turkey Corporate Finance department stated the fact that the extent of the retail sector in Turkey which was 302 billion dollars in 2011 is expected to rise to 421 billion dollars in 2015. According to Turkish Finance Minister Mehmet Simsek, inflation rate in Turkey would continue to drop in parallel with projection by the Central Bank. Turkey had an optimistic future in long-term period and foreign investors should be made aware on it. In 2050, Turkey's GDP would be 5-6 trillion USD and its population would near 110 million.
Turkey indeed stands out as a shining moon and crescent against a very dim backdrop, because it has minimal exposure to the EU debt crisis while it still remains, the EU is its biggest trade partner. Similarly, it is undeniable that Turkey has a manageable budget deficit; a durable, stable and dynamic banking system, a rapidly growing economy despite of a slow growth this year and nominal exposure to the EU debt crisis that made Turkey’s economy prevail. For this reason, Turkey achieves to get many foreign policy ends, particularly those that are normally above the limits of its material capabilities.
Other factors which contributed to Turkey’s economic resiliency are the new Turkish property law: that was implemented by parliament recently and is set to permit more foreign nationals to purchase property in Turkey. The new law omitted the reciprocity clause from the foreign ownership law, which had prohibited nationals from other countries from procurement of property in Turkey, because Turks is not allowed to buy in their country. Presently, the government will officiate the selection among those 89 countries whom their nationals will be included to the list of foreigners who can acquire property in Turkey .The new law also increased the expanse of land foreigners can buy which is a relief with the old law which only permit acquisition from 2.5 hectares to 30 hectares.
The significant part about the new law is that it is plausible to permit Arabs to purchase in Turkey, specifically those from the Gulf States. From the property investment point of view, Turkey stands out as a dynamic and stable investment destination. It is expected that the Arabs alone will add billions in revenue to the property industry each year. By 2023 Turkey aspire to become one of the top five global tourist destinations, and heightening its market share in the Middle East forms part of this plan. Relatively , like the country’s dynamic and effective foreign policy, which pursues stronger political and economic connections with Middle East states, the Culture & Tourism Ministry is also reaching out not only to the Gulf States emphasising its common cultural and religious traditions to attract more visitors from the region but also to the entire world.
Undeniably, Turkey remains to be an economic powerhouse on the world tourism and economic stage, ranking 14th out of 181 countries surveyed by the World Travel & Tourism Council (WTTC). Revenues earned from travel and tourism directly contributed TL55.1bn ($30.2bn) to the country’s economy in 2011, representing 4.3% of GDP. This contribution is expected to rise by 1.7% in 2012 and by 2.9% per year from 2012 to 2022 to TL74.4bn ($40.8bn). Turkey the world's 15th largest GDP-PPP and ranked 17th largest Nominal GDP. Turkey is the 15th largest economy in the world. Turkey is a very attractive destination for Foreign Direct Investments (FDI), as it has sustained robust economic growth over the last nine years