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Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Growth rebounded strongly from the initial impact of the pandemic, reflecting a dynamic private sector and stimulative policies, the country being among the few countries not to dive into recession. Turkey’s growth was buoyant in the first half of 2022 (7.5% year-on-year) driven by sustained private consumption and a recovery in tourism. However, investment activity has been subdued and macroeconomic imbalances have risen, resulting in an overall yearly growth rate of 5% according to the IMF. Economic growth is projected to decelerate to around 3% per annum in 2023 and 2024 amid weaker external demand, persistent geopolitical uncertainties, and slower household consumption in light of rising inflation and the erosion of purchasing power.

Fiscal policy remained supportive in 2022, with the country increasing its budget deficit to 5.9% (from 5.1% one year earlier – IMF) following the approval of several measures for energy consumers and ambitious state-subsidised social housing projects. The IMF expects the deficit to widen over the forecast horizon, to 6.5% this year and 6.6% the next, partly due to the global stagnation resulting from the impacts of the war in Ukraine which are expected to worsen the current account deficit. In 2022, the public debt-to-GDP ratio decreased to 37.5% from 41.8% but should follow an upward trend in 2023 (37.7%) and 2024 (39.6% - IMF). The debt level is still low, although the short-term foreign debt stock totalled USD 138.1 billion as of the end of August 2022 (up by 13.6% from end-2021). Despite high inflation – the rate skyrocketed to 73.1% in 2022 due to increased energy bill and higher cost of imports due to the depreciation of the Turkish lira - the central bank has reduced its base rate several times, to the current level of 9% as of January 2023, making Turkey being the only OECD country to have lowered policy interest rates during the year. Hence, the inflation rate is forecast to remain high in 2023 (51.2%) reflecting a gradual pass-through of the recent lira depreciation and wage increases to consumer prices, before easing slightly the following year (24.2% - IMF). By the end of 2022, the IMF recommended early policy rate hikes accompanied by moves to strengthen the central bank’s independence.

According to IMF estimates, employment partially recovered along with the rebound in economic activity, hence the unemployment rate decreased to 10.8% in 2022 and is forecast to stabilize at around 10.5% over the projected period. In an effort to contrast the erosion of households’ purchasing power, the minimum wage was raised by 30% in July 2022, six months after a 50% increase. A further 55% increase was announced for 2023. Market conditions remain challenging, particularly among females and the youth. Wage inequality and the size of the informal sector remain long-standing problems. In 2022, the IMF estimated the country’s GDP per capita (PPP) at USD 38,759, 28.1% below the EU average.

Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 905.841,154.601,340.691,402.111,454.23
GDP (Constant Prices, Annual % Change)
GDP per Capita (USD) 10,62213,38415,36815,89916,317
General Government Balance (in % of GDP) -3.1-6.4-4.4-3.8-3.7
General Government Gross Debt (in % of GDP) 31.734.431.932.231.5
Inflation Rate (%) n/a51.262.552.548.1
Unemployment Rate (% of the Labour Force) 10.39.910.110.210.2
Current Account (billions USD) -48.41-48.51-40.10-39.26-39.57
Current Account (in % of GDP) -5.3-4.2-3.0-2.8-2.7

Source: IMF – World Economic Outlook Database , October 2021

Country Risk

See the country risk analysis provided by La Coface.



Main Sectors of Industry

The agricultural sector constitutes 5.5% of Turkey’s GDP. Despite employing 18% of the population, the sector continues to suffer from low productivity due to reliance on small farms. Approximately 11% of Turkey’s territory is used as agricultural land. Wheat is the country’s main crop, though Turkey is the world’s third-largest exporter of tobacco and the largest producer of hazelnuts (nearly 70% of global production). Turkey continues to be a net exporter of agricultural products, but livestock imports are growing exponentially to compensate for the shrinking animal breeding sector. Mineral resources are abundant but under-exploited. According to the latest figures from Turkstat, in 2022 cereals production increased by 15.7% when compared with the previous year (to 36.9 million tonnes), same as for that of wheat (+10.5% - 19.5 million tonnes), maize (+3.7% - 7 million tonnes), barley (+47.8% - 8.5 million tonnes), and fruits, beverage and spices crops (+4.6% - 26.1 million tonnes).

The secondary sector accounts for 31.1% of GDP and employs 25% of the workforce. Manufacturing is the main industrial activity of the country, accounting for 22% of GDP (World Bank). Car manufacturing and textile spearhead the Turkish industry, and other important segments are food products, basic metals and fabricated metal products, plastic products, chemicals, and electrical equipment. Turkey is the fifth-largest textile exporter in the world. The iron and steel sector in Turkey is of great importance for the general performance of the manufacturing industry due to its increasing production capacity, export potential and the inputs it provides to other sectors.
The services sector has grown rapidly in the early 2000s, peaking at 59% of GDP in 2009 but has fallen since to account for 52.8% of GDP in 2021, while employing 57% of the country’s workforce (World Bank, latest data available). Tourism represents nearly 4% of GDP and is a major source of foreign currency for the nation. Although the sector was severely affected during the COVID-19 pandemic, it recovered in 2022: in the January-October period, 39.6 million foreign tourists visited the country, marking an 88% increase from the same period one year earlier. The sector’s target for 2023 has been set at 60 million visitors and USD 56 billion in tourism revenues. The Turkish banking sector is comprised of 53 banks: 34 deposit banks (of which three are state-owned), 13 development and investment banks, and 6 participation banks (European Banking Federation).

Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 17.1 26.5 56.3
Value Added (in % of GDP) 6.5 31.9 51.2
Value Added (Annual % Change) 0.6 0.9 9.7

Source: World Bank - Latest available data.

Monetary Indicators 20162017201820192020
Turkish Lira (TRY) - Average Annual Exchange Rate For 1 USD 3.023.654.835.707.01

Source: World Bank - Latest available data.



Foreign Trade

Turkey’s economy is open to foreign trade, which represents 71% of its GDP (World Bank, latest data available). Automobile (13.3% of total exports including passenger cars, transport vehicles and accessories for vehicles, with a turnover of USD 29.3 billion worth of exports in 2021, according to the Uludag Automotive Industry Exporters' Association), jewellery (3%) and petroleum oils products (2.9%) were the top exports of Turkey in 2021. The main imported products were ferrous waste (4.1%), petroleum oils (3.7%), motor cars (2.5%) and accessories (2.1%), and gold (2% - data Comtrade).

Germany (8.6% of all exports), the U.S. (6.5%), the United Kingdom (6.1%), Italy (5.1%), and Iraq (4.9%) were among the top destinations for Turkish exports. China (11.9%), Russia (10.7%), and Germany (8%) were the main supplier of goods in Turkey, followed by the United States (4.8%) and Italy (4.3%).
Turkey has 22 active free trade agreements (FTAs), including its very first trade deal with the European Economic Area in 1991 and the most recent one with the United Kingdom, which entered into force on 1 January 2021. Trade agreements with Qatar, Lebanon and Sudan are also expected to enter into force soon. At the same time, Turkey has pursued FTA negotiations with Ukraine, Japan, Thailand and Indonesia and will start renegotiating the terms of its existing agreements with Georgia, Malaysia and Moldova. Furthermore, the UAE and Turkey signed a joint statement on starting negotiations for a bilateral trade and investment deal.

Turkish trade structure has been characterised by a wide deficit (USD 29.3 billion in 2021 according to World Bank data) mainly due to energy imports. Also, as most of its exports are tied to imports of intermediate, semi-finished or raw products, the evolution of the trade balance has been traditionally linked to economic growth and the lira's value against the US dollar. In 2021, Turkey's imports of goods totalled USD 271.4 billion, whereas the total value of its exported goods reached USD 225.2 billion (+23.6% and +32.7% year-on-year, respectively – data WTO). According to WTO, exports of services in 2021 were higher than imports, at USD 58.1 billion and USD 31.6 billion, respectively. Overall, the trade deficit was estimated at 0.2% of GDP (World Bank).
The government has maintained an active policy of incentivising the use of locally sourced fuel for power generation by supporting renewables and domestic coal-fired production in order to reduce the country's reliance on gas imports. According to preliminary figures by Turkstat, in the January- December period of 2022, exports increased by 12.9% to USD 254.2 billion amid the depreciation of the Turkish lira, whereas imports increased at a faster pace (34.3%), reaching USD 364.4 billion. Cumulatively, foreign trade volume increased by 24.6% to USD 618.6 billion.

Foreign Trade Values 20182019202020212022
Imports of Goods (million USD) 231,152210,345219,517271,426363,711
Exports of Goods (million USD) 177,169180,833169,638225,214254,192
Imports of Services (million USD) 28,45328,65723,88429,59640,413
Exports of Services (million USD) 59,34167,21738,24361,40890,285

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20182019202020212022
Foreign Trade (in % of GDP) 62.662.761.070.880.5
Trade Balance (million USD) -40,726-16,781-37,874-29,313-89,684
Trade Balance (Including Service) (million USD) -9,83821,779-23,5152,499-39,812
Imports of Goods and Services (Annual % Change) -6.2-
Exports of Goods and Services (Annual % Change) 8.84.2-14.424.99.1
Imports of Goods and Services (in % of GDP) 31.430.232.235.542.6
Exports of Goods and Services (in % of GDP) 31.232.528.735.337.9

Source: World Bank ; Latest available data

Foreign Trade Forecasts 2023 (e)2024 (e)2025 (e)2026 (e)2027 (e)
Volume of exports of goods and services (Annual % change) -
Volume of imports of goods and services (Annual % change) 20.710.

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

International Economic Cooperation
Turkey is a member of the following international economic organisations: G-20, WTO, IMF, Pacific Alliance (observer), OECD, ICC, among others. For the full list of economic and other international organisations in which participates Turkey click here. International organisation membership of Turkey is also outlined here.
Free Trade Agreements
The complete and up-to-date list of Free Trade Agreements signed by Turkey can be consulted here.

Main Partner Countries

Main Customers
(% of Exports)
Germany 8.3%
United States 6.6%
United Kingdom 5.1%
Italy 4.9%
Spain 3.8%
See More Countries 71.2%
Main Suppliers
(% of Imports)
China 11.4%
Germany 6.6%
Switzerland 4.2%
United States 4.2%
Italy 3.9%
See More Countries 69.7%

Source: Comtrade, Latest Available Data



Political Outline

Current Political Leaders
President: Recep Tayyip Erdoğan (since August 2014) - AKP
Head of Government:  President Recep Tayyip Erdoğan (since 9 July 2019 - a 2017 constitutional referendum eliminated the post of prime minister after the 2018 general election)
Next Election Dates
Presidential: June 2023
Legislative: June 2023
Current Political Context
The political scene is being dominated by the upcoming elections, which will take place in May 2023, resulting in polarization within the society.
On the international level, Turkey is embroiled in several regional conflicts (including in Syria, Libya, and Iraq) and its relations with the West are tumultuous. Furthermore, Turkey has played an important diplomatic role in the Russia-Ukraine conflict, with the country brokering a vital grain export deal signed in Istanbul in July. Although being part of NATO (with the second largest army of the Alliance after the U.S.), Turkish President Recep Tayyip Erdogan tried to maintain a neutral stance towards Russia and there have been tensions inside the Alliance as Turkey opposed Finland and Sweden's talks to join NATO: in January 2023 Erdogan claimed that the two Nordic countries should deport or extradite up to 130 Kurdish considered "terrorists" by its government before the Turkish parliament will approve their bids to join NATO.
Turkey has restored its relations with the United Arab Emirates and the two countries have signed 13 cooperation agreements in various sectors as President Recep Tayyip Erdoğan visited the Gulf country in February 2022. Furthermore, Erdogan had formal meetings with Saudi crown prince Mohammed bin Salman in an effort to normalize diplomatic relations with the Gulf country, while Turkey also agreed to restore full diplomatic relations with Israel.
Main Political Parties
- Justice and Development Party (AKP): centre-right, primary leading party, socially conservative
- Republican People’s Party (CHP): centre-left, primary opposition party based on social-republican values
Peoples' Democratic Party (HDP): pro-minority, left-wing, socialist and democratic
- Nationalist Movement Party (MHP): nationalist party, allied ot the AKP
- The Good Party (IYI): Nationalist, Conservatist
Executive Power
The President of the Republic is the head of state and the head of the government. He or she is elected by direct universal suffrage for a five-year term of office. The President has the function of an arbitrator (promulgation of laws, signature of decrees) and appoints the Council of Ministers. The President also appoints the judicial organs and other governmental organs. The position of Prime Minister was abolished following the constitutional referendum of April 2017.
Legislative Power
Legislative power in Turkey is unicameral. The Parliament, called the Grand National Assembly of Turkey, has 600 seats and its members are elected by universal suffrage for five years, according to a system of proportional representation.


COVID-19 Country Response

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
For the general overview of the key economic policy responses to the COVID-19 pandemic (fiscal, monetary and macroeconomic) undertaken by the government of Turkey please consult the country's dedicated section in the IMF’s Policy Tracker platform.
Support plan for businesses
For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.