Official inflation in May reached 73.5%, while independent non-governmental research institutes (ENAG) report that in reality inflation reaches 168%. An example of the daily unknown in prices is the fact that restaurants in Istanbul keep their menus blank so they change them every day. The country’s economy is constantly in trouble and this phenomenon will continue until the date of the presidential elections. The aim of the current President of Turkey, Recep Tayyip Erdogan, is to win the elections by giving benefits to low-income households, a few months before the elections to correct their income losses.
Τhe national currency
Under the supervision and guidelines of the Turkish president, the central bank of Turkey insists on a loose monetary policy, trying with continuous interventions in the foreign exchange market to support the Turkish lira, but depleting the country’s foreign exchange reserves.
The national currency is experiencing the biggest slide against the dollar worldwide this year, with a -20% drop and after a cumulative drop of 45% in 2021. The result is that imports, including energy and raw materials, are even more expensive and perpetuates the vicious circle. On the other hand, the high growth rates of the Turkish economy continue to impress as in the first quarter of 2022 the GDP increased by 7.5% on an annual basis. Although growth does not translate into corresponding prosperity for the majority of the Turkish people who are brought to their knees under the weight of precision and with a currency that is steadily losing more and more of its value.
| Sizes of the Turkish Εconomy | |||||||
| 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | |
| GDP growth rate (%) | 6,1 | 2,9 | 7,4 | 2,6 | 0,9 | 1,8 | 11,0 |
| GDP (USD,bn) | 864,32 | 869,69 | 858,99 | 778,47 | 761,00 | 719,95 | 802,7 |
| GDP per capita (USD) | 11,085 | 10,964 | 10,696 | 9,793 | 9,208 | 8,597 | 9,539 |
| Unemployment % (mean) | 10,3 | 10,9 | 10,09 | 11 | 13,6 | 13,2 | 12,0 |
| Exports (USD, bn) | 143,8 | 142,5 | 157,0 | 167,9 | 171,5 | 169,5 | 225,3 |
| Imports (USD, bn) | 207,2 | 198,6 | 233,8 | 223,0 | 202,7 | 219,4 | 271,4 |
| Trade Balance (USD, bn) | -63,39 | -56,07 | -76,78 | -41,86 | -31,17 | -49,91 | -46,13 |
| Current Account Balance (USD, bn) | -27,31 | -27,04 | -40,87 | -21,74 | 5,3 | -35,54 | -13,69 |
| Public Debt/GDP (%) | 27,3 | 27,9 | 27,9 | 30,1 | 32,6 | 39,7 | 42.0 |
Growth
According to Turkish Statistical Institute (TUIK) data, in 2021 the GDP showed an increase of 11% compared to 1.8% in 2020, amounting to 802.7 billion US dollars (with a base year of 2009=100). Turkey, through a pandemic, recorded the highest growth rate among the G20 countries (second is India with 8.3% and then China with 8.1%) for 2022. Trust Economics estimates that its growth will moves close to 2.8%. In absolute numbers, however, its GDP will show a decline of around 780 billion USD due to the devaluation of the currency. But beyond the big problems, the Turkish economy has a huge productive base, with certain sectors being at the top of Europe and the world.
| Forecasts for the Turkish Economy | ||
| 2022 | 2023 | |
| GDP (USD,bn) | 780 | 805 |
| GDP per capita (USD) | 9,100 | 9,305 |
| GDP (% annual change) | 5,0 | 3,9 |
| Export Growth (% annual change) | 10 | 6 |
| 10-Year Bond Yield (% end of year) | 23 | 20 |
| Dollar/Lira exchange rates (% end of year) | 20 | 22 |
| Euro/Lira exchange rates (% end of year) | 21 | 24 |
| Public Debt (% of GDP) | 36,0 | 35,3 |
| Trade Balance (USD, bn) | -55 | -43 |
| Exports (USD, bn) | 250 | 273 |
| Imports (USD, bn) | 307 | 320 |
| Current Account Balance (USD, bn) | -44,0 | -35,0 |
| Foreign Exchange Reserves (USD, bn) | 120 | 140 |
Member of G20
The Turkish economy is the 20th largest in the world (11th by purchasing power criterion, IMF data for 2021), while the country is a member of the G20 and in international economic organizations it is among the recently industrialized countries. Its population also, according to TUIK in 2021, reached 84.68 million, showing an annual increase of 12.7%, with the percentage of the population aged 15-64 reaching 67.9%. According to data from the Turkish Statistical Institute, Turkish imports in 2021 reached $220.7 billion, an increase of 20.5%, while Turkish exports increased by about 29%, rising to $181 billion.
The Production
The sectors in which Turkey has the greatest industrial growth are electrical and electronic devices, where Turkish companies are among the largest producers of consumer electronics and household appliances in Europe.
Textiles and the production of ready-made garments are the third most important industry in the country and the second most important in terms of exports. The automotive industry is an important part of the economy, and the industry is an integral part of the global production network. Turkey ranks 14th internationally in passenger vehicle production and 9th in light truck production. The rail vehicle industry is also one of the strongest in the economy.
The shipbuilding industry is the 5th largest worldwide in terms of capacity. They are made from fuel and chemical tankers, fishing vessels, bulk carriers, recreational vessels, even warships, etc.
Turkey ranks 7th worldwide among iron and steel producing countries and 1st in Europe. Tourism is also one of the most important branches, while in 2021 tourist arrivals increased by 85%.
The country is also among the top 10 agricultural producing countries in the world, while the construction sector is among the top. In the 2022 list of the 250 largest construction companies, 40 are Turkish, while the international projects executed by Turkish companies so far are estimated at 356 billion dollars.
As the country experiences high growth rates, the energy demand has multiplied. According to the latest Report of the International Energy Agency (IEA), Turkey has largely succeeded in diversifying its energy mix, tripling its electricity production from RES in the last decade.
Further diversification of energy sources is expected, with the first nuclear power plant coming into operation in 2023. The economy remains, however, dependent on fossil fuel imports (93% oil and 99% natural gas). In this context, among the country’s priorities is the expansion of domestic hydrocarbon exploration and extraction.
