Turkey: country overview

16 August 2012
by Ina Dimireva -- last modified 16 August 2012

Located at the crossroads between Europe and Asia, Turkey has a rich cultural and ethnic diversity. Turkey is a candidate country for membership of the European Union.

Turkish flag

Member of Schengen area: No

Political system: Republic

Capital city: Ankara

Total area: 780 580 km²

Population: 71.5 million

Currency: Turkish lira

Turkey map

Country overview

Located at the crossroads between Europe and Asia, Turkey has a rich cultural and ethnic diversity. Its history stretches from ancient civilisations, such as the Hittites, through the Greek and Roman periods (when St Paul introduced Christianity there) to Byzantium and the Ottoman Empire. The modern Republic of Turkey was founded in 1923 as a western-style secular State. Nearly 99% of the population is Muslim. A considerable Kurdish population lives in the south-eastern part of the country.

In 330 AD, Constantinople (today’s Istanbul), which lies on the Bosphorus between the Black Sea and the Mediterranean, became the capital of the Byzantine Empire, the eastern half of the Roman Empire.

Turkey’s architectural gems include the Selimiye and Suleymaniye mosques and the world-famous church of St Sophia, which became a mosque under the Ottomans and is now a museum. The country’s vast archaeological heritage is a major tourist attraction. At its height, the Ottoman Empire was the dominant power in the eastern and southern Mediterranean and the Middle East.

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, 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 8.2% in 2010, as exports returned to normal levels following the recession. Turkey's public sector debt to GDP ratio has fallen to roughly 40%. Continued strong growth has pushed inflation to the 8% level, however, and worsened an already high current account deficit. Turkey remains dependent on often volatile, short-term investment to finance its large trade deficit. The stock value of FDI stood at $99 billion at year-end 2011. Inflows have slowed considerably in light 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