Current Economic Developments and Projects

Introduction

Turkey’s recent performance suggests that as long as the public sector keeps its house in order, private sector is ready and has the potential to take the lead both in Turkey and all around the globe. Turkey’s strong macro-economic performance has been a reflection of both the dynamism of the region and the unlocking of the high potential of its economy.

Turkey was able to attain a significant result in a relatively short time on the economic front. Behind this success rests “confidence” and “stability”. The Turkish Governments have been committed to the implementation of the economic policy.

Hence, predictability, transparency and delivering on its commitments enabled Turkey to build confidence not only in the domestic market, but also among foreign business circles. Turkey's message to the outside world is quite clear: The resolute implementation of the adjustment policies and structural economic measures are the best way to tackle the difficulties and usher in a new period of prosperity with social benefits.

Investments Abroad

Turkish businessmen have been expanding their investments steadily to the neighboring and wider regional countries. They do not hesitate, even under extremely difficult conditions, to do business in such countries as Afghanistan and Iraq. Traditional and strong engagements of our businessmen with their counterparts in most Arab countries pave the way for easier access to the Middle East market. Particularly, Turkish contractors have so far successfully completed over 3000 projects at international standards, in 70 countries across the globe. Total business volume of the Turkish construction sector reached USD 100 billion in October 2007 with an impressive five-fold increase.

Infrastructure Projects in Turkey: The GAP project

	Turkey has also embarked on grand infrastructure projects. The Southeastern Anatolian Project (GAP) is the most ambitious development project undertaken by Turkey. Its basic objectives include the improvement of living standards and income levels of people so as to eliminate regional development disparities and contribute to social stability and economic growth by enhancing productivity and employment opportunities in the rural sector. The project area covers 9 provinces in the basins of the Euphrates and Tigris.
	GAP comprises 22 dams, 19 hydroelectric power plants, and numerous irrigation networks. The overall project will regulate 28% of Turkey's water potential, generate 27 billion kw/h of electric energy and irrigate about 17,000 square kilometers of land, thus increasing the total arable land in Turkey by 50%. It is considered one of the 9 mega projects in the world. The potential in both industry and agriculture to be generated through the GAP is expected to increase the income level of the region fivefold and create employment for 3.5 million people in the region. The overall completion rate of the GAP Project is 54%.

Energy Strategy of Turkey

Turkey forms a natural energy bridge between the source-rich countries of the Caspian basin, Middle East and the world markets. As one of the biggest investors in the region and having close historical, cultural and economic ties with the countries of the region, Turkey acts not only along with its commercial interest but also bears the responsibility for supporting these nations in their social and economic developments.

It is with these considerations that the East-West Energy Corridor Project was elaborated. The East-West Energy Corridor essentially aims at transporting the Caucasian and Central Asian energy resources to western markets through safe and alternative routes. The East-West Energy Corridor Project mainly comprises the Baku-Tbilisi-Ceyhan (BTC) crude oil pipeline, the South Caucasian natural gas pipeline (Baku-Tbilisi-Erzurum natural gas pipeline) and the Turkmenistan-Turkey-Europe gas pipeline projects.

The Baku-Tbilisi-Ceyhan (BTC) oil pipeline project has just been completed. The BTC pipeline, with a capacity of 50 million metric tons per annum (1 million barrel per day), is expected to become the main export route for the oil resources of the landlocked Caspian region. The first tanker was already loaded at Ceyhan Terminal on 28 May 2006. The BTC is crowned with the extension of the pipeline to Kazakhstan.

Another project which constitutes an important part of the east-west energy corridor is the Baku-Tbilisi-Erzurum natural gas pipeline project which entails shipping Azeri natural gas from the Shah Deniz field to Turkey. It will constitute the first leg of the trans-Caspian gas pipeline which will carry Turkmen gas to western markets. Concrete steps were also taken for the European connection of this network. The Turkish-Greek Inter-connector project is also set to turn into the Turkey-Greece-Italy Inter-connector.

For moving gas further towards the Central European markets, efforts are also underway to realize the Nabucco pipeline project, stretching from Turkey to Austria via Bulgaria, Romania and Hungary. Realization of these projects will help Turkey to become the fourth artery of the EU for natural gas in the years to come.

In addition to the East-West Energy Corridor, Turkey also attaches great importance to the North-South axis and aims to act as a transit country on this route as well.

Taking into account the capacities of the BTC, the Iraqi-Turkish Oil Pipeline and Samsun-Ceyhan by-pass pipeline which is under development, as well as the oil transported through the Turkish Straits, it is expected that % 6 to 7 of global oil supply will transit Turkey in the years to come. Moreover, with a possible construction of an oil refinery and an LNG terminal, Ceyhan will become the “energy hub” of the region.

Human Resources

Turkey’s biggest asset is its young and educated human resource. Turkey, at the same time, is the leading country in Europe and fifth in the world in sending students overseas for higher education. This is expected to contribute considerably to enhance the human capacity not only of Turkey, but also of the whole region. A country of 72 million people, which has a per capita income of nearly USD 5500 as of 2006 (PPP USD 8000), is a sizeable market for any multinational company.

For more information:

Developments in the Economic Sector

Macroeconomic Developments

(last updated: December 21, 2007 )