Overview on Turkey

Modern Turkey was founded in 1923 from the Anatolian remnants of the defeated Ottoman Empire by national hero Mustafa KEMAL, who was later honoured with the title Ataturk or "Father of the Turks." Under his leadership, the country adopted wide-ranging social, legal, and political reforms. After a period of one-party rule, an experiment with multi-party politics led to the 1950 election victory of the opposition Democratic Party and the peaceful transfer of power. Since then, Turkish political parties have multiplied. Turkey joined the UN in 1945 and in 1952 it became a member of NATO. In 1964, Turkey became an associate member of the European Community. Over the past decade, it has undertaken many reforms to strengthen its democracy and economy; it began accession membership talks with the European Union in 2005.

Turkey’s position and role in the world has become a more pivotal one. Its geographical position, wedged between the European landmass, Russia and the Middle East, has given it a new strategic importance.

Turkey has an especially significant place in the Muslim world. Thanks to the legacy of Ataturk, it is a rare example among Muslim countries of a functioning secular democracy. Compared with much of the Arab world, it has been hugely successful in economic, diplomatic and military terms.

Turkey has also made the most of being an energy corridor between east and west. A decade of confrontation over oil and, especially, gas between Russia and the West has enabled Turkey to act as a buffer. Oil and gas pipelines already snake across Turkey from Azerbaijan via Georgia. The Turks have also signed up to the ambitious Nabucco gas-pipeline project, which is intended to bypass Russia. Oil began to flow through the Baku-Tbilisi-Ceyhan pipeline in May 2006, marking a major milestone that will bring up to 1 million barrels per day from the Caspian to market. Several gas pipelines also are being planned to help move Central Asian gas to Europe via Turkey, which will help address Turkey's dependence on energy imports over the long term.

Mr Dervis, a World Bank economist became Turkey’s finance minister in March 2001. He was responsible for devising and adopting financial and fiscal reforms as part of an IMF program which provided a new framework for Turkish monetary and fiscal policy, which has stood the country in good stead. The economy suffered badly in the global recession of 2009, but over the previous five years it had been vigorous, and it bounced back so quickly that in 2011, it is likely to grow faster than those of almost all other European countries. Turkey experienced GDP growth of 8.9% in 2010, the fastest of all OECD economies. It was the world’s fastest growing economy in the first quarter of 2011.

The reforms strengthened the country's economic fundamentals and ushered in an era of strong growth - averaging more than 6 per cent annually until 2009, when global economic conditions and tighter fiscal policy slowed growth to 4.7 per cent, reduced inflation to 6.5 per cent - a 34-year low - and cut the public sector debt-to-GPD ratio below 50 per cent. Turkey's well-regulated financial markets and banking system weathered the global financial crisis and GDP rebounded strongly to 7.3 per cent in 2010, as exports returned to normal levels following the recession. It is on the verge of acquiring an investment-grade credit rating; inflation is in single figures.

In the 1990s foreign direct investment was running at less than $1 billion a year, but ten years later, before the GFC briefly sent it back down again, it was closer to $20 billion. The banks have been transformed and the country has a strong financial sector.

In the 1990s Turkey’s GDP grew by an annual average of just 4 per cent. In 2002-08 that rose to an average of about 6 per cent before the recession hit in 2009. Inflation, running at an average of 75 per cent a year in the 1990s, is down to 9 per cent in 2010. The public debt is back below 50 per cent of GDP.

The OECD published a report on the Turkish economy in September 2010,which pointed out that Turkey would be the organisation’s fastest-growing member in 2010/11 and likened its performance to that of the emerging-market BRICs. There are signs that over the next seven years Turkey’s growth will match or exceed that of any other big country except China and India.

Turkey's economy is increasingly driven by its industry and service sectors, although its traditional agriculture sector still accounts for about 30 per cent of employment. An aggressive privatisation program has reduced state involvement in basic industry, banking, transport, and communication, and an emerging cadre of middle-class entrepreneurs is adding a dynamism to the economy.

Turkey's traditional textiles and clothing clothing sectors still account for one-third of industrial employment, despite stiff competition in international markets that resulted from the end of the global quota system.

Other sectors, notably the automotive, construction, and electronics industries, are rising in importance and have surpassed textiles within Turkey's export mix. Turkey is now the world’s biggest cement exporter and second-biggest jewellery exporter. Its construction order book is second only to China’s. It is Europe’s leading maker of televisions and DVD players and its third-biggest maker of motor vehicles. Turkey is the world’s fourth largest consumer of gold, importing 42.5 tonnes of gold in 2010, worth over US$2 billion at current prices. Gold imports are predicted to rise by 50% in 2011. The country has strong tax incentives to promote additional domestic gold production.

Turkey is a member of the G20 club of important economies. It held a temporary seat on the United Nations Security Council in 2009-10. Some forecasts suggest that during the next decade it will grow faster than any country bar India and China. Others predict it could become the world’s tenth-biggest economy by 2050.

Turkey has a favourable demographic outlook. The average age of its 72 million people is only 29, against over 40 in the EU. By 2050 its population will have risen to almost 100 million.

Further economic and judicial reforms and prospective EU membership are expected to boost Turkey's attractiveness to foreign investors.

Turkey has a new and progressive mining law and strong Government support for mining, which is reflected in the fact that there is a growing international mining community. Turkey has instituted incentives for capital investment and precious metal projects and gold producers are exempt from VAT and import and excise taxes. There is a 20 per cent corporate tax and a 2 per cent Royalty on any gold produced at site.