Occupying one of the largest land areas between the Middle East, Europe and the Caucaus, Turkey is endowed with abundant water supplies as well as a young and educated population.
The biggest employer in Turkey is the agriculture industry. However the dominance of this sector is predicted to decrease due to the growing pace and size of the industrial sector. The largest exporter in the Turkish economy is the textile sector which accounts for 5% of the global textile market. This is followed by the construction and construction material sector which occupies 4% of the global construction market and growing. Turkey's Automotive industry is set to grow even further thanks to the improving disposable income available to Turks and the country's growing young population.
Turkey's tourism industry is currently the rising star of the Turkish economy. With approximately $13 billion in earned revenue for the Turkish economy for the year 2003 , it has created many employment opportunities for Turkey's young and growing population, especially in regional areas. Furthermore the remittances sent by the Turkish expatriate community (especially in Europe) is estimated to provide 5% of the country's GDP. The Turkish economy is expected to grow even further in the next number of years. This is due to the Turkish government's privatisation programme which will place a large number of government owned enterprises into private hands. Furthermore the strict adherence of the Turkish government to its budgetary responsibilities has translated into reduced inflation and a stable currency (the Lira).
Recent progresses with the economy so far have been rewarded with growing international confidence in the Turkish economy which has translated into increased investment in the country. It is expected that the government's strict management of public finances will improve in line with Turkey's plans to qualify for entry into EU. This will increase the chances for the continued improvement of the health of the Turkish economy. Turkey's strategic position as a bridge between Europe, the Middle East and Central Asia will also continue to count in the economy's favour as it adds to Turkey's advantages as an investment destination. This advantage will specially apply to energy companies who wish to sell gas from the Middle Eastern and Central Asian countries to Europe.
Challenges
In terms of Turkey's finances, the biggest challenge is posed by its large external debt. The debt problem has been created over the years as a result of political instability and financial mismanagement of the country by previous administrations. The under performing banking system also contributed to the financial instability and the undermining of investor confidence which complicated the debt problem even further. This situation has been improving recently, nevertheless Turkey still has to finance the repayment of its large accrued debts for the foreseeable future. This is viewed as a burden on the country's finances. The growing current account deficit is another issue which needs to be managed by Turkish economists.
Unemployment is another problem which the Turkish economy faces. This problem is especially noted in the rural areas where job opportunities are scarce and the main source of employment (ie. the agriculture industry) is losing its status.
The continued uncertainty over the status of the Turkey's Kurdish population and their quest for improved rights, plus the continuing saga over Turkey's refusal to recognise the Greek Cypriot government contribute to uncertainties over the country's internal and external political stability, especially with regards to Turkey's intentions to join the EU. However the most urgent political threat comes from Turkey's extremist Islamic groups who have carried out a number of deadly attacks inside Turkey. Although the Turkish government has made significant progress in uprooting the members of such organisations, it is estimated that there are still members of such groups at large.
In terms of infrastructure, the lack of sources of energy for the Turkish economy and population is one of the notable current obstacles for the growth of the Turkish economy. Although Turkey is blessed with enviably abundant water supplies, due to mismanagement and lack of coherent planning this resource has not been placed effectively in use for energy production. Demand for energy is growing and is expected to continue due to Turkey's growing population and expanding industrial sector. However it currently seems that it will be a number of years before the Turkish power sector is able to supply the required resources.
By: Meir Javedanfar- www.meepas.com Back |
