Turkey: country overview
16 August 2012by Ina Dimireva -- last modified 30 January 2017
In 1987, Turkey applied to join what was then the European Economic Community, and in 1997 it was declared eligible to join the EU. Turkey's involvement with European integration dates back to 1959 and includes the Ankara Association Agreement (1963) for the progressive establishment of a Customs Union (ultimately set up in 1995). Accession negotiations started in 2005, but until Turkey agrees to apply the Additional Protocol of the Ankara Association Agreement to Cyprus, eight negotiation chapters will not be opened and no chapter will be provisionally closed.
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Member of Schengen area: No
Political system: Republic
Capital city: Ankara
Total area: 780 580 km²
Population: 80.3 million
Currency: Turkish lira
Country overview
Turkey has been a candidate for EU membership since 1999. Accession negotiations started in 2005, and a revised Accession Partnership was adopted in 2008.
As a major emerging economy and a member of NATO and the G20, Turkey is a key partner for the European Union. It is recognised as an active regional foreign policy player, with an influential role in supporting reforms in its region. The EU is therefore committed to political dialogue with Turkey on foreign policy issues of mutual interest.
EU-Turkey political dialogue is carried on at all levels on issues of mutual concern. At ministerial level, dialogue is led for the EU by Baroness Ashton (High Representative for foreign affairs and security policy) and Stefan Füle (Commissioner for enlargement).
Economy overview
Turkey's largely free-market economy is increasingly driven by its industry and service sectors, although its traditional agriculture sector still accounts for about 25% of employment. An aggressive privatization program has reduced state involvement in basic industry, banking, transport, and communication. An emerging cadre of middle-class entrepreneurs is adding dynamism to the economy and expanding production beyond the traditional textiles and clothing sectors. The automotive, petrochemical, and electronics industries are rising in importance and have surpassed textiles within Turkey's export mix.
Oil began to flow through the Baku-Tbilisi-Ceyhan pipeline in May 2006, marking a major milestone that has brought up to 1 million barrels per day from the Caspian region to market. The joint Turkish-Azeri Trans Anatolian Natural Gas Pipeline (TANAP) is moving forward to help transport Caspian gas to Europe through Turkey, helping to address Turkey's dependence on imported gas, which currently meets 98% of its energy needs.
After Turkey experienced a severe financial crisis in 2001, Ankara adopted financial and fiscal reforms as part of an IMF program. 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 around 9% in 2010-11, as exports returned to normal levels following the crisis. Two rating agencies upgraded Turkey's debt to investment grade in 2012 and 2013, and Turkey's public sector debt to GDP ratio fell to 33% in 2014. The stock value of Foreign Direct Investment reached nearly $195 billion at yearend 2014.
Despite these positive trends, GDP growth dropped to 4.4% in 2013 and 2.9% in 2014. Growth slowed considerably in the last quarter of 2014, largely due to lackluster consumer demand both domestically and in Europe, Turkey's most important export market. High interest rates have also contributed to the slowdown in growth, as Turkey sharply increased interest rates in January 2014 in order to strengthen the country's currency and reduce inflation. Turkey then cut rates in February 2015 in a bid to spur economic growth.
The Turkish economy retains significant weaknesses. Specifically, Turkey's relatively high current account deficit, uncertain commitment to structural reform, and turmoil within Turkey's neighborhood leave the economy vulnerable to destabilizing shifts in investor confidence. Turkey also remains overly dependent on often volatile, short-term investment to finance its large current account deficit.
Source: Europa, CIA - The World Factbook
Useful links
Delegation of the EU to Turkey