Towards 100: Setting the sights high for long-term development

With 2023 the centennial of the establishment of the Republic of Turkey, elections in 2011 saw the government unveil a long-term vision for the country’s development that stretches ahead for more than a decade. The ruling Justice and Development Party (AKP), able to capitalise on an unprecedented period of political stability after winning its third consecutive general election, has set some ambitious goals. By 2023, the government expects to be exporting $500bn of goods and services. With four times its current output, Istanbul will have a third bridge across the Bosphorus, while the world’s second-longest suspension bridge will be part of a new Istanbul-Izmir highway. The prime minister has even revealed plans for a canal between the Black and Marmara Seas, bypassing Istanbul – labelling it his “crazy project”.

PLANS & PROJECTS: Currently though, the government is working on the somewhat less ambitious 9th Development Plan (9DP), which runs from 2007 to 2013. This sets out a number of long-term objectives, with these then focused into a series of short-term and medium-term programmes – with the 2010-12 Medium-Term Programme (MTP) followed in 2012 by the 2012-14 MTP. At the same time, there is a programme for harmonisation with EU accession requirements. In this, some 35 chapters have to be completed, each devoted to a different area of activity. This programme has effectively come to a halt of late, due to various political disputes. The 9DP sets out a series of goals: increased global competitiveness (see analysis), stable growth and a more equitable income distribution. A series of structural changes underpin this, centred on a shift to a more value-added, information-based society. The 2012-14 MTP, meanwhile, aims to increase employment, maintain fiscal discipline, boost domestic savings, decrease the current account deficit (CAD) and thus strengthen macroeconomic stability. Fiscal discipline has been strong. January 2012 saw the government post a TL1.7bn (€722.5m) budget surplus, 73% up year-on-year (y-o-y). The primary surplus, meanwhile, stood at TL7.1bn (€3bn), some 48% higher y-o-y. Overall, 2011 saw a budget deficit of TL17.4bn (€7.4bn), or 1.4% of GDP, though this was under the 1.7% expectation in the 2010-12 MTP.

2012 BUDGET: Thus, the government is confident that the 2012-14 MTP, beginning with the budget for 2012, can continue to drive growth, even at a time of global uncertainty. This budget, approved by parliament in December 2011, targets a year-end deficit of TL21.1bn (€9bn) and a primary surplus of TL29.1bn (€12.4bn). Expenditure has been increased from TL312.6bn (€132.9bn) in 2011 to TL350.9bn (€149bn), with non-interest expenditure at TL300.9bn (€127.8bn). The big beneficiary from the hike is the civil service, with plans for some 90,000 new jobs and a 12.25% increase in the central government budget. The MTP also addresses some structural issues surrounding the CAD.

Efforts to make Istanbul a global financial centre – reflected in ongoing debates about moving government financial sector institutions from Ankara to Istanbul – are noted, as is a commitment to boost research and development. Only if Turkey breaks its dependence on imported value added, the argument runs, can it really break away from the CAD. The programme also takes aim at taxes, in particular reducing the proportion of indirect taxes in government revenue. This means tackling the unregistered or “grey” economy, which the finance minister, Mehmet Şimşek, said had already shrunk 10 percentage points between 2002 and 2011. The exact size of the grey economy is highly disputed though, with figures ranging from 28% of GDP to 60%.

GROWTH TARGETS: The MTP also predicts that GDP will rise from $822bn in 2012 to $952bn by 2014. Over the same period, per capita GDP is to rise from $10,973 to $12,412, as GDP expands at 4-5% per annum. Under this scenario, unemployment will fall from 10.4% to 9.9%, while the CAD drops from 8% of GDP to 7% and annual inflation runs at around 5%. The government remains bullish about Turkey’s prospects and ability to rise above the crises in the eurozone and the region.


You have reached the limit of premium articles you can view for free. 

Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.

If you have already purchased this Report or have a website subscription, please login to continue.

The Report: Turkey 2012

Economy chapter from The Report: Turkey 2012

Cover of The Report:Turkey 2012

The Report

This article is from the Economy chapter of The Report: Turkey 2012. Explore other chapters from this report.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart