| COUNTRY PERSPECTIVES
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TURKEY |
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Country presentation |
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Introduction |
With a population of 72 million and estimated GDP of US$ 403 billion in 2006, Turkey is ranked the 20th largest economy in the world by the World Bank and one of the most dynamic emerging markets. Spanning continents, at the crossroads of Europe, Asia and the Mediterranean, Aegean Sea and Black Seas, its geographic location has made it a strategic country over the centuries.
Relations with the European Union are based on an association agreement known as the Ankara Agreement, signed on September 12, 1963 and effective December 1, 1964. The final phase instituting a customs union took effect on December 31, 1995, involving free movement of goods, adoption of the EU’s Common Customs Tariff, harmonisation of technical legislation, and regulations in the fields of intellectual, industrial and commercial property, competition and taxation.
A candidate for entry in the European Union since 1999, Turkey aspires to membership with the 25 states. Seventeen years after Turkey’s initial request for accession, the European Council agreed to open negotiations regarding adhesion on October 3, 2005. Turkey has committed to a long process of reform involving 35 goals, in conformity with the Copenhagen criteria, pre-conditions to entry in the EU. The European Commission has begun screening, the first phase of negotiations for adhesion, which makes it possible to evaluate the degree of preparation of countries applying for accession before deciding if a chapter can be opened for negotiation.
Turkey has undergone three major disasters and economic crises over the last ten years, in 1994, 1999 and 2001. The latter was particularly severe, marked by 50 percent devaluation of the currency, collapse of the banking sector, severe recession (a 6.7 percent decline in GDP), inflation of some 70 percent, and a net public debt to GNP ratio exceeding 90 percent. In response to the economic crisis, the government worked out a reform programme over the period 2002-2004 with support from the International Monetary Fund (IMF) and the World Bank. These reforms have had a positive impact and the economy has started to rebound rapidly, with gross national income up by 8.9 per cent in 2004 and 7.4 per cent in 2005, driven by private consumption, private investment, and export growth.
The volume of foreign direct investments (FDI) into Turkey reached an annual average of a billion dollar at the beginning of the 2000s. The recent period shows a remarkable growth with USD 2.8 billion recorded in 2004, USD 9.8 billion in 2005 and USD 20.1 billion in 2006. The number of companies with foreign capital amounted to 11,685 on January 1, 2006, including 2,825 companies created in 2005. |
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Challenges |
In spite of steady economic growth, certain imbalances such as a high unemployment rate for graduates and young people and a low proportion of working women continue to be of concern.
Approximately 95 percent of Turkish companies are small businesses with low productivity and technology levels. Prospects for development and modernisation are affected by limited access to credit and financing.
The country is highly dependent on imports of hydrocarbons.
The situation with Cyprus and the Kurdish minority, security issues and the role of the Army could in the long term weaken a currently stable political situation and make the accession of Turkey to the EU more difficult. |
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Strong points |
Greater domestic and international confidence since the opening of adhesion negotiations with the European Union will stimulate strong GNI growth, projected at an average of 6 percent for 2006-2007.
The government offers many incentives for capital investment and encourages regional development.
Globally, there are no restrictions on the ratio of foreign holdings and the requirement for minimum capital of US$ 50,000 to form a company has been removed.
Turkey has the support of the international community thanks to its exceptional geographic location. The 2005 financial support in the framework of the EU’s Pre-Accession Economic Programme came to 300 million Euros and loans from the European Investment Bank (EIB) amounted to 3.6 billion Euros. |
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References |
| Capital |
Ankara |
| Surface area |
774,820 km2 |
| Population |
72,000,000 inhabitants |
| Languages |
Turkish (Official), Arab, Greek, Armenian, Kurd, Ladino |
| GNP (dollars) |
US$ 362 bn in 2005 |
| GNP/per capita (dollars) |
US$ 5,800 (7,950 in ppp.) in 2005 |
| Currency |
New Turkish Pound or Lira (YTL).
1EUR = 1.6677 YTL - 1 USD = 1.3214 |
| Religion |
Secular State (99% of Muslims)
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| National holiday |
29th October (Republic -1923) |
| Association Agreement with EU |
Customs Union since 31/12/1995
Negotiations in progress for EU membership since 3/10/2005.
EU web site:
http://www.deltur.cec.eu.int
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| WTO membership |
Member since 26/03/1995 |
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Sources: TURKSTAT, Ministry of Finance, World Bank (CAS Report and CAS Progress Report), IMF (Word Economic Outlook Database 2006). |
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