Turkey: country overview16 August 2012
by Ina Dimireva -- last modified 12 February 2013
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 Choose translations of the previous link 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.
Member of Schengen area: No
Political system: Republic
Capital city: Ankara
Total area: 780 580 km²
Population: 71.5 million
Currency: Turkish lira
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 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, and 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, construction, 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 will bring up to 1 million barrels per day from the Caspian to market. Several gas pipelines projects also are moving forward to help transport Central Asian gas to Europe through Turkey, which over the long term will help address Turkey's dependence on imported oil and gas to meet 97% 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 9.2% in 2010, as exports returned to normal levels following the recession. Growth dropped to approximately 3% in 2012. Turkey's public sector debt to GDP ratio has fallen to about 40%. Continued strong growth has pushed inflation to the 9% level, however. Turkey remains dependent on often volatile, short-term investment to finance its large trade deficit. The stock value of FDI stood at $117 billion at year-end 2012. Inflows have slowed because of continuing economic turmoil in Europe, the source of much of Turkey's FDI. Further economic and judicial reforms and prospective EU membership are expected to boost Turkey's attractiveness to foreign investors. However, Turkey's relatively high current account deficit, uncertainty related to monetary policy-making, and political turmoil within Turkey's neighborhood leave the economy vulnerable to destabilizing shifts in investor confidence.
Source: Europa, CIA - The World Factbook