<hdr>The World Factbook 1994: Turkey<nl>Economy</hdr><body>
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<item><hi format=bold>Overview:</hi> In early 1994, after an impressive economic performance through most of the 1980s, Turkey faces its most damaging economic crisis in the last 15 years. Sparked by the downgrading in mid-January of Turkey's international credit rating by two US credit rating agencies, the crisis stems from two years of loose fiscal and monetary policies that have exacerbated inflation and allowed the public debt, money supply, and current account deficit to explode. Under Prime Minister CILLER, Ankara has followed seriously flawed policies that have destroyed public confidence in the government's ability to manage the economy. Inflation is now running at an annual rate of 107% and the public sector deficit is equivalent to 16% of GDP. Turkish firms have been hurt by high interest rates and a dramatic drop in consumer demand. Three Turkish banks have folded and the stock market has fallen 48% since the beginning of the year. Economic growth may drop to between 0% and 2% in 1994, compared to 7.3% in 1993. Moreover, the government is facing a severe cash crunch. In March 1994, the treasury came close to defaulting on a loan, and official foreign currency reserves are equal to less than two months' worth of imports. The unprecedented effort by the Kurdistan Workers' Party (PKK) to raise the economic costs of its insurgency against the Turkish state is adding to Turkey's economic problems. Attacks against the tourism industry have cut tourist revenues, which account for about 3% of GDP, while economic activity in southeastern Turkey, where most of the violence occurs, has dropped considerably. To cope with the economic crisis and instill domestic and international investor confidence in the fragile coalition government, CILLER has asked the IMF to endorse a stabilization package she introduced in early April 1994. Negotiations are underway for a standby agreement, which would give Turkey access to $450 million this year and enable her cash-starved government to return to the foreign capital markets.
<item><hi format=bold>National product:</hi> GDP—purchasing power equivalent—$312.4 billion (1993)
<item><hi format=bold>National product real growth rate:</hi> 7.3% (1993)
<item><hi format=bold>National product per capita:</hi> $5,100 (1993)
<item><hi format=bold>Agriculture:</hi> accounts for 16% of GDP and employs about half of working force; products—tobacco, cotton, grain, olives, sugar beets, pulses, citrus fruit, variety of animal products; self-sufficient in food most years
<item><hi format=bold>Illicit drugs:</hi> major transit route for Southwest Asian heroin and hashish to Western Europe and the US via air, land, and sea routes; major Turkish, Iranian, and other international trafficking organizations operate out of Istanbul; laboratories to convert imported morphine base into heroin are in remote regions of Turkey as well as near Istanbul; government maintains strict controls over areas of legal opium poppy cultivation and output of poppy straw concentrate
<item><hi format=bold>Economic aid:</hi>
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<item>• <hi format=ital>recipient:</hi> US commitments, including Ex-Im (FY70-89), $2.3 billion; Western (non-US) countries, ODA and OOF bilateral commitments (1970-89), $10.1 billion; OPEC bilateral aid (1979-89), $665 million; Communist countries (1970-89), $4.5 billion
<item>• <hi format=ital>note:</hi> aid for Persian Gulf war efforts from coalition allies (1991), $4.1 billion; aid pledged for Turkish Defense Fund, $2.5 billion
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<item><hi format=bold>Currency:</hi> 1 Turkish lira (TL)=100 kurus
