(Last updated: 28 Mar 2011)

Current business situation

The Department of Foreign Affairs and Trade (DFAT) provides advice for business travellers and tourists going to Turkey. This is regularly updated, and should be checked before planning travel.

Country overview

(Source: Department of Foreign Affairs and Trade - Country economic fact sheet)

Economic climate

Turkey, in an attempt to become a member of the European Union (EU), is making many changes in regulations and standards. Since the economic crisis in 2001, Turkey adopted reforms and succeeded in creating a strong and stable economy. The strong economy attracting foreign direct investment, a growing and young population with increasing purchasing power is creating opportunities for Australian businesses wanting to enter the Turkish market.

In 2009, Turkey was the 17th biggest economy globally in terms of its total GDP. A major economic reform program was started within the scope of an IMF stand-by arrangement, following the economic crisis in 2001. Successful implementation of the stand-by program accompanied by structural reforms saw the vulnerabilities in the economy decrease and have made the economy more attractive for foreign investment.

Although manufacturing overtook agriculture in the 1980s as the major contributor to GDP, agriculture continues to play a major role in the Turkish economy, especially in employment. Agriculture accounts for around 11 per cent of GDP and 27 per cent of employment. There is a substantial unregistered economy, with estimates of its value ranging from 20 per cent to 50 per cent of economic activity.

In 2009, Turkey was the EU’s seventh biggest trading partner and its seventh largest source of imports. EU countries took 46 per cent of Turkey’s exports and provided 40.5 per cent of imports.

Banking, social security and taxation reforms continue. Social security reform aims to reduce the pension deficit to less than one per cent of GDP over the long term. Tax reforms, including personal income tax, VAT, corporate tax and financial intermediation tax, aim to improve efficiency, reduce incentives to remain in the informal economy, and offset expected structural decline in revenues as interest rates and revenues from financial intermediation taxes decline. Financial sector reforms include adoption of a new banking law, strengthening of banking regulatory and supervisory authority, and restructuring and privatisation of state banks.

For the latest key economic indicators and statistics, please see the Department of Foreign Affairs and Trade country economic fact sheet.

Political climate

Turkey’s political system is based on a separation of powers. The current President is Abdullah Gül, who was elected by parliament on 28 August 2007.

The Republic of Turkey has a unicameral parliament, the Turkish Grand National Assembly (TGNA), with 550 deputies (parliamentarians). Legislative power is vested in the Head of Government and a Council of Ministers (Cabinet) which usually numbers around 35. The Deputies are elected on a first-past-the-post system for a five-year term. Political parties must achieve a national threshold of 10 per cent of the vote to gain representation in the TGNA.

Mr Erdoğan's ‘Justice and Development Party’ (AKP), established in 2001 and first elected in 2002, was returned to power in the general election on 22 July 2007. With almost 47 per cent of the vote, AKP won 340 of the 550 seats in parliament, a majority which allows it to govern in its own right. Voter turnout for the election was high (around 80 per cent).

The only two other parties in the election to exceed the 10 per cent threshold of votes required for parliamentary representation were the Republican People's Party (CHP – 112 seats) and the Nationalist People’s Party (MHP - 71 seats). Also, 23 independent MPs associated with the pro-Kurdish Democrat Society Party (DTP) and four other independents were elected.

Trade relations and statistics

Australia’s exports to Turkey are largely commodity-based, and include sales of coal, non-monetary gold, aluminium and lead. In recent times, there have been some successes in diversifying exports, including with the sale of a number of fast ferries to the Istanbul municipality.

The conclusion of a health protocol for breeding cattle between Australia and Turkey permits the export of live breeding cattle to Turkey.

Australia’s imports from Turkey are dominated by gold, dried fruits and nuts, and cargo vehicles. The level of two-way investment between Australia and Turkey is relatively small.

Australian companies are pursuing opportunities brought about by a growing Turkish market and privatisation programs. There is potential for greater services trade, particularly Australian participation in the education and training sector in Turkey.

Please see the Department of Foreign Affairs and Trade - Country economic fact sheet for key trade statistics.