How is the Turkish Economy?

The economy is a human activity consisting of consumption, trade, distribution and production, imports, and exports. It includes all kinds of activities done to meet the needs of people. Country economies also vary. Turkish economy and its global position are briefly presented.

What are the Characteristics of the Turkish Economy?

To understand the general state of Turkey’s economy in the world, it is necessary to know the history. The economic development in the Republic of Turkey period is based on the structure taken over by the Ottoman Empire.

Turkish economy is generally based on the characteristics listed below.

  • Agriculture
  • Industry
  • Services
  • Foreign trade

What are the Sectors Affecting the Turkish Economy?

The service industry has become important since the 1960s, especially an ever-increasing role in the Turkish economy since the 1980s. One of the most important reasons for this is that advances in technology lead to greater use of services in the production of manufactured goods. This situation increases the service content of imported and exported goods.

The industrial sector has a very important place in the development of Turkey and the name of this place is growth and technological development and innovation. Today, the economic race runs in two areas, income growth and economic independence. Both economic independence and permanent growth can be achieved with the industry sector.

The agricultural sector has an important place in the economic life of all countries regardless of the level of development of the countries. Because the majority of the foodstuffs and raw materials that people use for their survival are provided by the agricultural sector. Besides, in the economic development process, there is a close relationship and interaction between the agricultural sector and the industrial sector.

The energy sector is important for developing economies. Turkey’s prominence in global competition can only be possible with the production and export of cheap and high-quality industrial products. The most important condition for this is the performance of an energy sector that reduces foreign dependency on energy production and gives priority to our resources.

There is a close relationship between total construction investment and economic growth. Specifically, for developing countries such as Turkey. It has been determined that there is a one-way causality relationship running both from public sector construction investments to GDP and from GDP to public sector construction investments to private sector construction investments.

How is the Service Industry in Turkey?

Since the 1950s, the service sector has come to the fore in developed economies. This sector is not only in developed economies but also in developing countries in the following years.

The service industry in Turkey shows a very rapid development as well. So that, the share of this sector in national income continuously increased between 1990 and 2010. Especially in Turkey’s service trade, which has increased significantly since 1997, service exports have always been above imports. Tourism, health, transportation, and communication services are important items that provide foreign currency income to Turkey.

1. Tourism Sector

The leading sub-sector of the service industry in Turkey is tourism.

The tourism sector maintains its characteristic of being the fastest developing socio-economic phenomenon. The developing tourism sector helps to level the balance of payments of a country, to create income. Thus, to increase the foreign exchange income of the country, to mobilize many other sectors to which it is related such as construction, food, and beverage, entertainment, transportation, etc.), increase the infrastructure and superstructure investments, and most importantly, to reduce the unemployment problem by creating employment opportunities.

The Turkish tourism sector, which completed the year 2019 with an export volume of 180.8 billion USD, closed at the level of 169.7 billion USD in 2020. While the export volume in the first quarter of 2020 was 42.7 billion USD, this figure increased by 17.2% in the first quarter of 2021 and reached 50 billion USD.

2. Health Sector

Health services are a field that has a great impact on both the economic and social life of a country. Therefore, it is among the priorities of policy-makers and decision-making authorities of all countries. With the proclamation of the Republic, the new nation-state that emerged from the Ottoman Empire established the Ministry of Health as the first job in Turkey and tried to heal the war wounds. With the establishment of the country, the health sector began to play an active role in Turkey.

For example, the transaction volume in the pharmaceutical and health sector was 16 billion dollars in Turkey in 2019.

3. Transportation Sector

Within the scope of traditional services, the sectors in which Turkey has comparative advantages are transportation services and tourism services.

Transportation service is provided by road, air, sea, and rail transportation in Turkey. In transportation services, road transportation is the most widely used and costly service in Turkey. The roads created for the development of road transport can be arranged and made safer. Turkey which is surrounded by sea on three sides can use its geographical advantages by supporting short-distance sea transportation.

Most importantly, the logistics welcomed 2021 with an additional rise. In the January-March 2021 period, the index, which increased by 12% compared to the previous period, showed the highest increase since it began to be measured, with 124.74 points. The index points to an increase of more than 40 points compared to the same period of the previous year.

4. Communication Industry

The informatics sector, which is maintained with foreign-dependent technologies in Turkey; is trying to produce its values. The communication industry aims to grow with national and domestic productions. Although the communication industry in Turkey is not of significant size compared to the world and EU countries, it is one of the important markets in terms of growth potential.

According to the “Information and Communication Technologies Industry Market Data and Trends for 2020” announced by the Informatics Association of Turkey (TBD), the information and communication technologies industry grew by 22% compared to 2019 and reached a volume of 189 billion TL/(13.087.914.641,00 USD).

What is the Industry Sector in Turkey?

Due to the industrialization in the world, exports of industrial products, imports of raw materials, and foreign trade volume generally increase. While the rate of the population working in agriculture decreases, the rate of the population working in industry increases, and the number of unemployed people decreased. In addition, per capita income, urbanization rate, and life expectancy are increasing.

For example, with the industrialization steps in Turkey, GDP has increased while the share of the agricultural sector in GDP decreased. The agricultural sector, which accounted for 37.5% of GDP in 1960, made up only 7.9% in 2016.

1. Science-Technology

Since the 1960s, today’s so-called developed countries and Turkey have been in the process of implementing a planned science and technology policy.  All the policies that were tried to be implemented had to be shelved either because the government did not fully embrace the issue or because different priorities were brought to the agenda by taking the country’s conditions to the fore.

The increase in the gap between Turkey and other countries in the field of science and technology, as well as the fact that many countries achieved success with the National Innovation Systems, which they established their innovation-oriented development strategies in the 1970s, caused a change in terms of science and technology policies in Turkey.

2. Defense Industry

According to the data of the Turkish Exporters Assembly, in 2021, there are an increase in the Turkish defense and aviation sector exports despite the Coronavirus epidemic, and implicit and explicit embargoes. While the developing Turkish defense sector develops its exports with the domestic and national motto, primarily localization and nationalization-oriented activities; takes steps within the framework of the strategy and action plans prepared for sustainable, systematic process management. While the export activities of the sector are handled within a strategic framework, current and potential opportunities are evaluated, and risks are also managed within a process.

3. Textile Industry

The textile industry is a capital-intensive industry to a large extent in terms of its sub-sectors in Turkey.

The textile industry has a wide and important production and product range such as fiber, yarn, woven and knitted fabrics, non-woven surfaces, dyeing and finishing home textiles, technical textiles, and carpets. Preparation and spinning of textile fiber, including textile weaving, finishing, dyeing of textiles and clothing, etc. It covers the finishing processes and the manufacture of textile products (home textile products, blankets, carpets, rugs, cord, rope, rope, etc.).

Despite the decrease last year, the Turkish textile industry realized the highest first 6-month exports of all time with 6.2 billion USD’ worth of exports in the first half of 2021.

4. Iron and Steel Industry

It is the most important industry branch that provides input to industrial branches, especially the machinery, metal, and automotive industries. Turkey ranks 10th in iron and steel production after big countries such as the Russian Federation, Japan, China, the USA, Germany, and Brazil. Turkey provides 3-4% of the world’s iron and steel market.

What is the Agricultural Sector in Turkey?

The agricultural sector has been significant in the economic and social development of Turkey since the establishment of our Republic. In addition, developed countries have always protected their agricultural sectors to a greater extent than developing countries. The reason for this is explained as preventing the decline in the agricultural population by providing the agricultural population with an income close to that of other sectors.

Agriculture is an indispensable sector in the Turkish economy for the following list of reasons.

  • Feeding the public,
  • Contributing to national income and employment,
  • Meeting the raw material needs of the industrial sector,
  • Capital transfer to industry,
  • Contributing directly or indirectly to exports.

The agricultural sector grew by 4.8% in 2020. It was the highest growth figure of the last 3 years that year. Turkish agricultural products increased by 20% compared to 2019 and reached 333.3 billion TRY/23,094,630,339 USD, breaking the record in the history of the Republic. Turkey is the leader in Europe and among the top 10 in the world in terms of agricultural output.

The factors affecting the agricultural sector in Turkey are listed below.

  • Geographical Location: Turkey experiences four seasons at the same time. So, agricultural products are various. Also, underground resources are effective.
  • Geographical Formations: The landforms provide great agricultural products.
  • Climate: Depending on the location conditions, the climatic diversity and plant diversity are great. Greenhouse cultivation has developed on the Aegean and Mediterranean coasts due to the warm winter. Marine tourism has developed.

How is Turkey’s Energy Sector?

Energy, which constitutes the most important input of production economically, is an important production factor that human beings emphasize today. The energy resources in the world have started to run out slowly and the existing ones have become very valuable. Turkey has several sources such as coal, gas, oil, and nuclear in addition to renewable energy sources.

When we look at Turkey, it is seen that it is a country that grows faster than the world average because of its developing economy. Energy consumption is also increasing regularly in parallel with this trend. While Turkey’s total energy consumption was 73.5 million tons of oil in 2000, this sectoral volume has more than doubled by the end of 2018. Looking at the annual changes in energy consumption, an average of 4.4% growth stands out in the 2000-2018 period. This rapid growth also causes Turkey’s share in total global energy consumption to increase.

How is the Construction Industry in Turkey?

One of the biggest sectors affecting Turkey economically is the construction sector. The construction sector has been continuing and developing since ancient times to meet the need for housing. The sector in Turkey has regressed in certain periods and has gained great momentum in certain periods.

The construction industry is one of the sectors most affected by Covid-19. Now it is struggling to catch up with its old momentum with the removal of pandemic restrictions. Although increasing costs and decreasing turnover negatively affect the financials of the sector, a recovery is foreseen depending on the measures to be taken in the second half of the year.

For example, in Turkey, it was recorded that the production-related construction materials industrial production, which is one of the important data on the construction and real estate sector, increased by 47% in the second quarter of 2021.

What is the Impact of the Construction Industry on the General Economy in Turkey?

The construction industry has played an important role in the growth rates of Turkey in the development process since the 1970s. The share of the sector, which covers the construction of houses, roads, dams, power plants, and all kinds of structures, in the GNP has been 6% in recent years.

What is the Benefit of buying Construction in Turkey?

The Turkish construction industry which is largely based in the national capital has a significant impact on the employment and production process as it concerns hundreds of professions.

The sector, which has great experience and potential in the national and international fields, is called the ‘locomotive sector’ with its feature of activating more than 200 sub-sectors connected to it and the ‘sponge sector’ with its large employment source.

Almost all the products in the construction sector are considered ‘investment goods’.

Buying construction will help you gain profit in the long run.

What is the Turkish Economy Graph?

In 2020, all world economies took important economic steps against the negative effects of the pandemic. So, the Turkish economy entered this process with dollarization and high inflation.

While the world economy contracted by 3.5%, Turkey achieved a positive annual growth of 1.8%. In the period November 2020 – to March 2021, thanks to the right policies in the fight against inflation in central banking, foreign currency inflow to the country accelerated. Besides, predictability increased, and the country risk premium (CDS) decreased from 550s to 300 basis points.

Also, the industrial production index increased in 2021.

According to the predictions, the Turkish economy will achieve 4.5% real growth in 2021, following an annual real growth of 1.8% in 2020.

What Are the Effective Big Companies in the Turkish Economy?

The companies that make the biggest contribution to the Turkish economy are in the following areas:

  • Automotive Companies: The Turkish automotive industry completed 2020 with a total production of 1,336.000 vehicles, domestic sales of 796,000 units, and exports of 916,000 units with a total value exceeding 26 billion USD. In 2020, sales increased by 62%, while production decreased by 11% and exports by 27%.
  • Construction Companies: In the 2018 Q3 – 2020 Q2 period, the contraction in the sector was 7% on average. After shrinking for the last eight quarters, in the shadow of the pandemic, there was a 4.7% growth for the first time in 2020 Q3. Campaigned house sales to melt existing building stocks, expansionary monetary policies (low interest, supports provided within the scope of Credit Guarantee Fund (KGF), and cash loans exceeding 3,394,709,119 USD) implemented to reduce the negative impact of the pandemic period, and Public-Private Services, the construction of which continues despite the pandemic period.
  • Tourism Companies: Turkey ranks sixth in the number of tourists and 14th in tourism revenues in the world. A quarterly share of 0.3 percent in 2021 is the lowest level in history. Tourism revenues decreased from 4.1 billion dollars to 2.5 billion dollars. Also, its share in the export volume was 4.9 percent. According to the expectations, 4-4.5 million tourists from Russia and 3 million tourists from Germany will come to Turkey by the end of the year.
  • Retail Companies: The retail sector is one of the most important sectors of Turkey. It has a turnover of 1.2 trillion TRY/825.275.520.000 USD in total, according to the Turkish Federation of Shopping Centers And Retailers data. The retail industry, in which 2.5 million people work, is an important representative of the service industry with its many different actors.

What is the Largest Sector of The Turkish Economy?

When we look at the distribution of public investments by sector, the transportation sector is the largest sector of the Turkish economy between 2002-and 2019.

One of Turkey’s fastest expanding businesses in transportation and logistics. Turkey’s government has spent about $108 billion on transportation and infrastructure during the last 18 years. Turkey is an important freight destination as well as a major transit hub. Given Turkey’s growing population – currently, over 83 million – and inward migration from rural areas to larger cities, traffic has become a major issue, forcing local governments to spend extensively on ITS.

Many highways, railways, and other transportation-related projects are either underway or set to break ground to meet the needs of a rapidly industrialized country, therefore the transportation sector’s influence is projected to grow over time.

What will the Turkish Economy be like in the Future?

High-frequency data show that the economic momentum until the second half of this year, the economic growth in Turkey will increase to 4.5% in 2023. After receding to 3.5% in 2022.

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