The Turkish economy is the 18th largest economy globally. Real GDP expanded by 4% in 2013 from 2.1% in 2012. This was as a result of stronger private consumption; public investment and inventory build up. Per capita income increased to $10,782 in 2013 from $10,459 in 2012. But the consequential higher domestic demand led to a widening of current account deficit and increase in inflationary pressures. The overall 12-month inflation increased from 7% in the previous year to 7.9%, while core inflation (excluding food, tobacco, alcohol, gold and energy prices) also increased significantly from 5.8% to 8.4% over the year. The most significant challenge Turkey had to face in 2013 was increased volatility of the financial markets. Turkeyâ€™s GDP has been highly volatile over the last few years as well though the average trend line growth during this period has been around 4%. A reason for growth volatility has to do with the economyâ€™s dependence on capital inflows for growth. With domestic savings being extremely low investment is financed by foreign capital. The increased flow of investments, which is a significant driver for economic growth, is also the risk factor for the economy. The economic forecast for 2014 is lower to 2013 at around 2.4% with continuing political uncertainty, depreciation of the Lira and monetary and macro-prudential tightening.
Trade and services, which account for 60% of Turkeyâ€™s GDP, improved slightly growing 4.6% in the first half of 2013 compared to 3.2% in the same period in 2012. Wholesale, retail and financial services comprise 43% of trade and services. Turkey has one of the most robust industrial sectors in the region, accounting for about 21.8% of GDP and growing in 2013 at 2.9% - the same rate as 2012. Manufacturing accounted for 75% of Turkeyâ€™s industrial output. Manufacturing, including a large vehicle production complex, grew 2.5% during the first half of 2013. Manufacturing employment increased 3.9% in the first nine months of 2013, after having risen by 5.3% the previous year. Tourism increased with 14.3 more visitors in the first six months of 2013 compared to 2012. Transportation, storage and communication makes up about 15% of GDP and grew 2.8% in the first half of 2013 compared to 4.5% in 2012. Turkeyâ€™s exports reached $120.9 in the first nine months of 2013, a small .6% increase compared to 2012. Turkish exports to the European Union suffered due to the economic slowdown there, but exports to Iran, especially gold for energy, increased. Sectors ripe for investment include real estate, hospitality and construction. Energy, heavy industry, transportation and automotive sectors are also good bets given Turkeyâ€™s strength in infrastructure.
Turkeyâ€™s overall doing business ranking (ranked 69 out of 189 economies) improved by 3 ranks in 2014 from 2013. This is due to a significant improvement in the rankings of protecting investors ( 34) and getting electricity(49). Rankings of some of the other indices were â€“ starting a business (93), dealing with construction permits (148), registering property (50) , getting credit (86) and enforcing contracts (38). The worst ranked index was dealing with construction permits (148) and resolving insolvency (130). In the region the country ranks 8th in terms of doing business.