Turkey’s dynamic economy is a complex mix of modern industry and commerce, along with a traditional agriculture sector that still accounts for more than 35 per cent of employment. It has a strong and rapidly growing private sector, yet the state still plays a major role in basic industry, banking, transport and communication. The largest industrial sector is textiles and clothing, which accounts for one third of industrial employment. It faces stiff competition in international markets with the end of the global quota system. However, other sectors, notably the automotive and electronics industries, are of rising importance in Turkey’s export mix.
For many years real GNP growth has exceeded 6 per cent. The economy is turning around with the implementation of economic reforms, and 2004 GDP growth reached 9 per cent, followed by roughly 5 per cent annual growth in 2005-06. Inflation fell to 7.7 per cent in 2005, a 30-year low. The country showed strong economic gains in 2002-06, which were largely due to renewed investor interest in emerging markets. Before 2005 FDI in turkey was less than a $1 billion (£515.39 million) annually, but further economic and judicial reforms and prospective EU membership are expected to help boost FDI.
Privatisation sales are currently approaching $21 billion (£10.8 billion). Oil has been flowing through the Baku-Tblisi-Ceyhan pipeline since May 2006, marking a major milestone that will bring up to 1 billion barrels per day from the Caspian to market. Without a doubt, the commitment of the government to economic reform, supported by prudent macroeconomic and structural policies, has played a significant role in strengthening investor confidence in the Turkish economy.
Foreign Direct Investment (FDI)
FDI in Turkey is rapidly increasing as a result of the Turkish government working consistently hard to make investment both easier and more attractive. As a result of the government’sefforts, between January and October in 2006 alone almost $16 billion (£8.2 billion) was committed to Turkey in the form of FDI.
Money is flowing into everything from banking tomanufacturing and one particular sector where FDI has reached record levels is the real estate sector. A number of significant, international property companies such as Emaar Properties and ETA Star have committed millions to housing and commercial property projects in Turkey, and, going in to 2007, bidding is taking place for a range of new projects such as the biggest real estate project to date in Istanbul for the construction of three skyscrapers and a yachtmarina. Donald Trump is said to be in the bidding war for the development that will beconstructed in Zeytinburnu.
But Istanbul isn’t the only area to be boosted by FDI; there is a great deal of investor focus beginning to target the southern Turkish coastline, which has a hugely successful tourism industry already, and all of this investment confidence and contribution is allowing for the creation of jobs, which means that local purchasing power is significantly improving.
Steady growth – Turkish tourism can be characterised by these two words. The year 2005 was a turning point for tourism in Turkey. In 2004, there was a 29 per cent growth in the number of arrivals. In 2005, the foreign visitor arrival growth rate was 25 per cent. This indicates that Turkish tourism has sustainable growth and stability. Tourist receipts for 2005 came to $11.9 billion (£6.1 billion) compared to $10.6 billion (£5.4 billion) in 2004. In 2005, the biggest change occurred in the number of tourists coming from non-European countries. The USA, Iran, Denmark and Syria were the countries which showed the highest growth rate in the number of arrivals.
EU talks boost holidays in turkey.
More and more people are taking holidays now because of their increased purchasing power. With every step towards Turkey’s EU membership, more people in Europe are considering the Turkish coast as an exotic option that is also close to their homeland. EU membership talks and the booming Turkish economy have made Turkey a favourable nvestment haven. Reduced inflation and interest rates have stabilised the economy since 2003.
If Turkey can get the FDI it needs and attain full EU membership, it will become one of the most important and influential countries in the world as it will, strategically and politically, represent a bridge between the Middle East and Europe. The future prospects for Turkey and its economy are, therefore, very positive indeed over the medium to long- term, making the country an exciting investment opportunity for property buyers seeking significant returns over the same term period.
As the Turkish economy continues to expand and the standard of living improves further, the forthcoming membership of the European Union will further lift what is already a buoyant economy. the inventory of property bought and sold in turkey continues to grow because of ongoing government reforms and partnerships with business and overseas investors.