Fiscal discipline and a tight fiscal policy continue to be the main pillars of Turkey's economic program, and both have contributed substantially to disinflation, as well as to the strong growth performance. In addition to its sound macroeconomic policies, Turkey has implemented a comprehensive and far-reaching structural reform agenda. Compared with the experiences of other countries, Turkey's success has been remarkable, primarily on the back of its speed in carrying out structural and institutional changes. Indeed, Turkey has made great progress in restructuring its financial sector, as well as in improving public sector governance and its business environment.

The structural reforms that have been implemented are aimed at:

•    increasing the role of the private sector in the Turkish economy
•    enhancing the efficiency and resiliency of the finance sector
•    placing the social security system on a more sound basis.

These reforms have strengthened macroeconomic fundamentals of the Turkish economy.

Economic Growth

Sound economic policies combined with vigorous economic reforms have yielded favorable results; the economy has sustained robust economic growth over the last eight years. Due to resolutely implemented structural reforms and successful macroeconomic policies, Turkey has become one of the fastest growing economies in its region.

Stability and High Performance in the Economy

Between 2002 and 2010:

•    GDP increased by 218 percent, reaching USD 736 billion
•    Annual average real GDP growth of 4.8 percent
•    Inflation decreased from 30 percent to 6.4 percent
•    Public debt stock decreased from 74 percent of GDP to 42 percent of GDP
•    Budget deficit decreased from 10 percent of GDP to around 3 percent of GDP

Compound Annual Growth Rate (CAGR) of GDP (%), Constant Prices

Source: Turkish Statistical Institute (TurkStat)

In the last eight years, the Turkish economy has been one of the fastest growing emerging economies.

2002-2010 Compound Annual Growth Rate (CAGR) of GDP (%), Constant Prices

Source: IMF World Economic Outlook, April 2011

Turkey was the fastest growing economy in Europe and one of the fastest growing economies in the world in 2010.

2010 Real GDP Growth (%)

Source: IMF World Economic Outlook April 2011, Turkish Statistical Institute (TurkStat)

Since the Turkish economy has grown steadily, living standards have increased significantly. GDP per capita has increased from the level of USD 3,492 in 2002 to USD 10,079 in 2010.

GDP per Capita - Current Prices (USD)

Source: Turkish Statistical Institute (TurkStat)

2010 GDP - Current Prices (USD billion)

Source: IMF World Economic Outlook, April 2011

Declining Inflation

One of the most striking aspects of the Turkish economy’s recent performance has been the substantial decline in inflation in a strong growth environment with soaring energy prices. The annual inflation rate declined from the level of around 70 percent at the beginning of 2002 to a single digit, 6.4 percent by the end of 2010.

Average Inflation in Periods (%)

Prudent Fiscal Policy

Fiscal discipline continues to be the cornerstone of the macroeconomic performance of the Turkish economy.

Thanks to this prudent fiscal policy, Turkey has reduced its debt stocks, becoming one of the best performers among the European economies in reducing government debt. The general government debt stock ratio has been meeting the EU Maastricht Criteria, 60%, since 2004.

EU-Defined General Government Debt Stock (% of GDP)

Source: Undersecretariat of the Treasury

2010 General Government Debt Stock (% of GDP)

Source: IMF World Economic Outlook, April 2011

EU-Defined General Government Budget Balance (% of GDP)

Source: Undersecretariat of the Treasury, European Commission's Directorate-General for Economic and Financial Affairs (ECFIN)

2010 General Government Budget Balance (% of GDP)

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Source: IMF World Economic Outlook, April 2011, European Commission's Directorate-General for Economic and Financial Affairs (ECFIN)

 

Source: Republic of Turkey Prime Ministry Investment Support and Promotion Agency

 

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