page_title: Turkey
section_title: History
hierarchical_section_title: Turkey / Economy / History
caption_attribution_description: English: Bankalar Caddesi (circa late 1920's).
context_page_description: Turkey, officially the Republic of Turkey, is a transcontinental country located mainly on the Anatolian peninsula in Western Asia, with a smaller portion on the Balkan peninsula in Southeastern Europe. East Thrace, the part of Turkey in Europe, is separated from Anatolia by the Sea of Marmara, the Bosporus and the Dardanelles. Istanbul, which straddles Europe and Asia, is the largest city in the country, while Ankara is the capital. Turkey is bordered on its northwest by Greece and Bulgaria; north by the Black Sea; northeast by Georgia; east by Armenia, the Azerbaijani exclave of Nakhchivan and Iran; southeast by Iraq; south by Syria and the Mediterranean Sea; and west by the Aegean Sea. Approximately 70 to 80 percent of the country's citizens identify as Turkish, while Kurds are the largest minority, at between 15 to 20 percent of the population.
  At various points in its history, the region has been inhabited by diverse civilisations including the Anatolian peoples, Assyrians, Greeks, Thracians, Phrygians, Urartians, and Armenians. Hellenization started during the era of Alexander the Great and continued into the Byzantine era.
context_section_description: In the early decades of the Turkish Republic, the government (or banks established and owned by the government, such as Türkiye İş Bankası (1924), Sanayi ve Maadin Bankası (1925), Emlak ve Eytam Bankası (1926), Central Bank of Turkey (1930), Sümerbank (1933), İller Bankası (1933), Etibank (1935), Denizbank (1937), Halk Bankası (1938), etc.) had to subsidise most of the industrial projects, due to the lack of a strong private sector. However, in the period between the 1920s and 1950s, a new generation of Turkish entrepreneurs such as Nuri Demirağ, Vehbi Koç, Hacı Ömer Sabancı and Nejat Eczacıbaşı began to establish privately owned factories, some of which evolved into the largest industrial conglomerates that dominate the Turkish economy today, such as Koç Holding, Sabancı Holding and Eczacıbaşı Holding.
  During the first six decades of the republic, between 1923 and 1983, Turkey generally adhered to a quasi-statist approach with strict government planning of the budget and government-imposed limitations over foreign trade, flow of foreign currency, foreign direct investment and private sector participation in certain fields (such as broadcasting, telecommunications, energy, mining, etc.). However, in 1983, Prime Minister Turgut Özal initiated a series of reforms designed to shift the economy from a statist, insulated system to a more private-sector, market-based model.
  The reforms, combined with unprecedented amounts of funding from foreign loans, spurred rapid economic growth; but this growth was punctuated by sharp recessions and financial crises in 1994, 1999 (following the earthquake in Izmit that year), and 2001; resulting in an average of 4 percent GDP growth per annum between 1981 and 2003. Lack of additional fiscal reforms, combined with large and growing public sector deficits and widespread corruption, resulted in high inflation, a weak banking sector and increased macroeconomic volatility. After the economic crisis of 2001 and the reforms initiated by the then finance minister, Kemal Derviş, inflation dropped to single-digit figures for the first time in decades (8% in 2005), investor confidence and foreign investment soared, and unemployment fell to 10% in 2005. Turkey has gradually opened up its markets through economic reforms by reducing government controls on foreign trade and investment and the privatisation of publicly owned industries, and the liberalisation of many sectors to private and foreign participation has continued amid political debate.
  The real GDP growth rate from 2002 to 2007 averaged 6.8 percent annually, which made Turkey one of the fastest growing economies in the world during that period. However, growth slowed to 1 percent in 2008, and in 2009 the Turkish economy was affected by the global financial crisis, with a recession of 5 percent. The economy was estimated to have returned to 8 percent growth in 2010. According to Eurostat data, Turkish GDP per capita adjusted by purchasing power standards stood at 61 percent of the EU average in 2019. The public debt-to-GDP ratio peaked at 75.9 percent during the recession of 2001, falling to an estimated 26.9 percent by 2013.
  In the early years of the 21st century, the chronically high inflation was brought under control; this led to the launch of a new currency, the Turkish new lira (Yeni Türk Lirası) in 2005, to cement the acquisition of the economic reforms and erase the vestiges of an unstable economy. In 2009, after only four years in circulation, the Turkish new lira was renamed back to the Turkish lira with the introduction of new banknotes and coins.
caption: A view of Bankalar Caddesi (Banks Street) in the early years of the Turkish Republic. Completed in 1892, the Ottoman Central Bank headquarters is seen at left. In 1995 the Istanbul Stock Exchange moved to İstinye, while numerous Turkish banks moved their headquarters to Levent and Maslak.
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