Turkey's economy is a complex mix of traditional craftsmanship and modern industries, increasingly dominated by the latter. The country's large agriculture sector, which ranked 7th in the world in terms of production output in 2005, accounted for 11.2% of the employment in 2006.Turkey has a strong and rapidly growing private sector, yet the state still plays a major role in industry, banking, transport, and communication sectors. 

In recent years, the Turkish economy has expanded strongly, registering growth rates of 8.9% and 7.4% for the 2004 and 2005 fiscal years, respectively.

Macroeconomic Trends

The CIA classifies Turkey as a developed country.Turkey is also classified as a newly industrialized country by economists and political scientists worldwide, and is a member of the G-20 which brings together the 20 largest economies of the globe.

Turkey's per-capita GDP places it among the upper-middle income countries and it maintains a medium status in the United Nations' Human Development Index.

Agricultural Sector

Turkey ranked seventh worldwide in terms of agricultural production output in 2005.

As of March 2007, Turkey is the world's largest producer of hazelnut, fig, apricot, cherry, quince and pomegranate; the second largest producer of watermellon, cucumber and chickpea; the third largest producer of tomato, eggplant, green pepper and lentil; the fourth largest producer of onion and olive; the fifth largest producer of sugar beet; the sixth largest producer of tobacco, tea and apple; the seventh largest producer of cotton and barley; the eighth largest producer of almond; the ninth largest producer of wheat, rye and grapefruit, and the tenth largest producer of lemon.

Turkey has been self-sufficient in food production since 1980s. The agricultural output has been growing at a respectable rate. However, since 1980s agriculture has been in a state of decline in comparison to the total economy. Agricultural loans are issued with negative interest rates.

Today, many of the institutions established between 1930 and 1980 continue to play important roles in the practices of farmers. Many old agricultural attitudes remain widespread, but these traditions are expected to change with the EU accession process.

Industrial Sector

Turkey ranked twenty-first worldwide in terms of industrial production output in 2005. Its industrial sector had a 19% share in employment, 29% share in national production, and 94% share in total exports.

The largest industry are textiles and clothing (16.3% of total industrial capacity in 2005 according to the State Institute of Statistics), followed by oil refinery (14.5%), food (10.6%), chemicals (10.3%), iron and steel (8.9%), automotive (6.3%), and machinery (5.8%). Textiles and clothing also constitutes the largest share in total exports (19% in 2005), followed by automotive (18%), iron and steel (13%), white goods (10%), chemicals and pharmaceuticals (9%), and machinery (7%).

Turkey also has a large and growing automotive industry, which produced 1,024,987 motor vehicles in 2006, ranking as the 6th largest automotive producer in Europe. 

Turkey is one of the strongest sources of foreign direct investment in central and eastern Europe and the CIS, with more than $1.5 billion invested. Of this, 32 per cent has been invested in Romania, primarily in the natural resources and construction sectors, and an additional 46 per cent in Turkey’s Black Sea neighbours, Bulgaria and Romania. In addition, Turkish firms have sizeable recorded FDI stocks in Poland ($100 million). 

The Turkish construction/contracting industry has been a significant player in construction sector. 

The road network was an estimated 382,397 km in 1999, including 95,599 km of paved roads and 1,749 km of motorways. The rail network was 8,682 km in 1999, including 2,133 km of electrified track. There are 1,200 km of navigable waterways. There were 118 airports in 1999, including six international airports in Istanbul, Ankara, İzmir, Trabzon, Dalaman and Antalya. 

Telecommunications were liberalised in 2004 after the creation of the Telecommunication Authority. Private sector companies operate in mobile telephony and Internet access. There were 19 million fixed phone lines, 36 million mobile phones, and 12 million Internet users by the August, 2005.

Tourism Sector

Tourism is one of the most dynamic and fastest developing sectors in Turkey. According to worlds famous travel agencies, 31 of the 100 best hotels of the world are located in Turkey.

In the year 2005, 21,122,798 tourists vacationed in Turkey. The total revenue was $18.2 billion and with an average expenditure of $679 per tourist. Over the years, Turkey has emerged as a popular tourist destination for many Europeans, often competing with Greece, Italy and Spain. Turkish destinations such as Antalya and Muğla (sometimes called the Turkish Riviera) have become very popular among European tourists.

Financial Sector

The Central Bank of the Republic of Turkey was founded in 1930, as a privileged joint-stock company. It possesses the sole right to issue notes. It also has the obligation to provide for the monetary requirements of the state agricultural and commercial enterprises. All foreign exchange transfers are exclusively handled by the central bank. The bank has 25 domestic branches, as well as branches in New York, London, Frankfurt, and Zurich.

The Istanbul Stock Exchange opened in 1985 and Istanbul Gold Exchange in 1995. The stock market capitalisation of listed companies in Turkey was valued at $161,537 million in 2005 by the World Bank.

Commerce

After years of low levels of Foreign Direct Investment (FDI), in 2005 Turkey succeeded in attracting $9.6 billion in FDI and is expected to attract a similar level in 2006. A series of large privatizations, the stability fostered by the start of Turkey’s EU accession negotiations, strong and stable growth, and structural changes in the banking, retail, and telecommunications sectors have all contributed to the rise in foreign investment. Turkey has taken steps to improve its investment climate through administrative streamlining, an end to foreign investment screening, and strengthened intellectual property legislation. However, a number of disputes involving foreign investors in Turkey and certain policies, such as high taxation of cola products and continuing gaps in the intellectual property regime, inhibit investment. Turkey has a number of bilateral investment and tax treaties, including with the United States, that guarantee free repatriation of capital in convertible currencies and eliminate double taxation. 

In recent years the economic situation has been marked by erratic economic growth and serious imbalances. Real GNP growth has exceeded 6% in many years, but this strong expansion has been interrupted by sharp declines in output in 1994, 1999, and 2001. Meanwhile the public sector fiscal deficit has regularly exceeded 10% of GDP - due in large part to the huge burden of interest payments, which in 2001 accounted for more than 50% of central government spending - while inflation has remained in the high double digit range.

Since 2003, the inflation has lowered to single digits, and the economy is showing an average growth of 7.8%, between 2002-2005. Fiscal deficit is benefiting (though in small amount) from large industry privatizations.

For a time, the lira was synonymous with low-valued currency. Recently, the "New Turkish lira" was introduced, worth 1 million old lira. (In essence, they "slashed off six zeroes".) This was meant to be a symbol of a stronger currency, after a long period of high inflation that had devalued the currency so greatly.

Natural Resources

Turkey ranks tenth in the world in terms of the diversity of minerals produced in the country. Around 60 different minerals are currently produced in Turkey. The richest mineral deposits in the country are boron salts and Turkey’s reserves amount to 63% of the world’s total. 

Turkey is an oil producer, but the level of production isn't enough to make the country self sufficient. As a result, it is a net oil and gas importer.

The pipeline network in Turkey included 1,738 km for crude oil, 2,321 km for petroleum products, and 708 km for natural gas in 1999. Several major new pipelines are planned, especially the Baku-Tbilisi-Ceyhan pipeline for Caspian oil fields, the longest one in the world, which recently opened in 2005.

According to the CIA World Factbook, other natural resources include coal, iron ore, copper, chromium, uranium, antimony, mercury, gold, barite, borate, celestine (strontium), emery, feldspar, limestone, magnesite, marble, perlite, pumice, pyrites (sulfur), clay, arable land, hydropower.

To cover the increasing energy needs of its population and ensure the continued raising of its living standard, Turkey plans several nuclear power plants. Nuclear power proposals were presented as early as in the 1960s, but plans were repeatedly canceled even after bids were made by interested manufacturers because of high costs and safety concerns.