The violent conflict poses a major threat to political and social stability in the country, and is a major hurdle to Turkey's accession to the ELI. Turkey is strengthening its ground forces in its campaign against the PACK, and has pressed into action 10,000 soldiers, along with fighter Jets, helicopter gunship, tanks, and personnel carriers in major attacks against the PACK in Iraqi Sardinian. The overpayment's military response has affected democratic initiatives to resolve the Kurdish problem, and the persistent conflict has fueled ethnic tensions between Turks and Kurds, while increasing the security risk in the country.
This could have an impact on its growth Diplomatic row with neighbors The country is facing growing tensions with Iran, Syria, Israel, and Cyprus. By agreeing to host North Atlantic Treaty Organization missile defense radar installations on its territory as part of the European defense against Iranian missiles, Turkey NAS irked Iran. In response, Iran NAS threatened to target Turkish sites it it ere to be attacked by the US or Israel. Meanwhile, Turkey is following a challenging foreign policy with Syria, pressing Syrian President Basher Sad to resign and imposing sanctions on the country.
Turkey's support of the Syrian opposition, with the country having provided refuge to its leaders, is exacerbating the political turmoil in Syria. Relations with Israel have been strained since 2010, after Israeli commandos killed nine Turkish activists following a raid on an aid flotilla heading to the Gaza Strip. The situation deteriorated further after Turkey expelled the Israeli ambassador n September 2011; in addition, the country has suspended military links with Israel.
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Turkey also faces diplomatic tensions with Cyprus, after the Cypriot hydrocarbon exploration was resumed with Israeli co-operation in the Mediterranean Sea. Rampant corruption Turkey has a serious problem with regards to corruption in its political and bureaucratic machinery. The 2010 Corruption Perceptions Index, published by anti- corruption organization Transparency International, ranked Turkey 56th out of 178 countries. According to both Transparency International and the World Bank, irruption at the institutional level has traditionally been the cause of hesitancy among prospective investors.
In 2007, several bureaucrats found to be involved in corrupt activities during various operations carried out by the police were sacked. In March 2010, the mayor of Danna was suspended by the Ministry of the Interior following allegations of corruption. In October 2010, 13 lawyers and two former members of the Supreme Court of Appeals were detained for suspected bribery. According to the Association of Certified Fraud Examiners, the average rate of fraud in Turkish organizations is 15%, compared to the world average of 7%, which gaslights the level of organizational corruption in the country.
According to the 2011 Index of Economic Freedom, the country scored Just 44 on freedom from corruption, reflecting the high levels of corruption in Turkey. The enforcement of laws against corruption is uneven, while the Judicial system is viewed as susceptible to external influence. As a result of increasing corruption cases and a perceived lack of political commitment, Turkeys outlook in this area is bleak. Published 1/2012 page 14 Future prospects E membership During the 1999 Helsinki Summit, Turkey became a candidate for EX. membership, allowing on from the customs union signed with the EX. in 1995.
After 2001, Turkey entered a period of high growth and significant structural transformation, with an average annual growth rate of 7. 3% during The country has been able to sustain this position due to the government's continued commitment to improving its economic policies as part o t EX. accession initiatives. The EX. accession negotiations have required the country to increase the role of the private sector in the economy, enhance the financial sector's efficiency and resiliency, and strengthen the social security system. Read about Castro's economic policies
Furthermore, 22 of 27 EX. member states have a positive opinion regarding Turkeys entry. The prospect of EX. accession is expected to provide a fillip to the Turkish economy. Future risks Disharmony between government and military Turkey has a history of long-lasting military coups and dictatorship, and relations between the government and the military have not been positive for a number of years. Tensions between the ruling GAP and the TASK have intensified since June 12, 2009, when the newspaper Attar published a story alleging the discovery of a military plan to undermine the government.
This led to indignation among politicians from all sides, and although relations had returned to normal two weeks after publication, speculation regarding the incident remained high among political groups, making relations with the military hostile. The incident also raised uncertainty over the continuation of civilian power in the country. During early 2010, tensions were high between the government and sections of the military, as the latter was opposed to the government's constitutional reform package.
In September 2010, a referendum on constitutional reform backed amendments to increase the control of parliament veer the army and the Judiciary. Hundreds of military officers have been charged by the government over the military alleged coup plan to topple the government in 2003. The government investigation led to the resignation of General Isis Saner in July 2011, in protest over the detention of 250 generals, admirals, and lower ranking officers over various charges. Tense relations between the military and the government represent a risk in the medium term. Published 1/2012 page 15 Economic analysis Over the years, Turkey has implemented several reforms to encourage financial market development. The Turkish banking sector maintained a sound growth path in 2010, with net profit of $13. Ban. The financial sector had a CARR of 20% during 2002- 10, and was not affected by the global financial crisis. The country has followed sound macroeconomic strategies in combination with strong fiscal policies and structural reforms to manage economic progress and attract more FED into the country.
Free trade agreement (FAT) negotiations are currently underway between Turkey and Colombia, and the country aims to start negotiations with India and Ethiopia. However, Turkey's declining current account balance has hindered its economic stabile TTY. The current account deficit rose more than to reach S in 2010, fueled and sustained by the domestic consumption of imported goods, high- energy imports, and the dependence of the export industry on imported intermediate goods and machinery.
The Turkish lira depreciated around 16% against the dollar in the first three quarters of 2011, and was one of the worst performing currencies in any of the emerging markets. This depreciation will make imports costlier and further impact the country's fiscal situation. Average annual growth in unemployment stood at around 5. % during 2002-10, with the highest unemployment growth reported for 2009 at 27%. Rising unemployment is increasing fiscal pressures, which remain a concern.
The liberalizing of interest and foreign exchange rates provided scope for new participants in the banking sector, and several foreign banks ere encouraged to operate in Turkey.
By 2010, Turkey had 45 banks (of which 17 were foreign banks) operating nearly 9,500 branches. The Turkish banking sector maintained a sound growth path in 2010. The total asset size of the banking sector increased around 12% to reach $625. Ban in 2010, compared to $536. Ban in 2009. The ratio of the banking sector's asset size to GAP increased from 83. 7% in 2009 to 87. 1% in 2010. In 2010, total loans stood at $330. Ban and total deposits were around $399. Ban. The banking sector made a net profit of $13. Ban in 2010, compared too net profit of $13. 1 Ban in 2009.
According to the Turkish Banking Regulation and Supervision Agency, the country's banking sector had a published 1/2012 page 16 PESTLE Analysis CARR of 20% during 2002-10, while the insurance sector had a CARR of 25% during the same period. The insurance sector has been boosted by the social security reform that introduced universal health insurance. The country's banking sector had a capital adequacy ratio of 19% in 2010, much higher than the mandatory limit of 8%.
This indicates that Turkeys financial sector has not been affected by the global financial crisis. Strong macroeconomic policies Turkey has followed sound macroeconomic strategies in combination with strong FED into the country. The structural reforms have been hastened by the country's efforts to Join the EX..
The Organization for Economic
Co-operation and Development (COED) expects the country to grow at an average of 6. 7% during 2011-17. Turkey is focusing on emerging industrial production centers to help maintain balanced economic growth in the country.
From the current economic strongholds of Istanbul, Gizmo, Ankara, Danna, and Bursa, it has shifted its focus to Denizen, Cognizant, Kaisers, and Kenya. As of April 2010, the country authorized more than 250 organized industrial zones, out of which 120 were fully operational as of 2009. These are special economic zones designed to help boost industrial development and employment in the country.
Current account deficit Turkey's declining current account balance has hindered its economic stability.
Turkeys current account balance has been facing an increasing deficit since 2002, with the exception of a decline in 2009. According to the central bank, Turkey's current account deficit was down by around 67% to $ban in 2009. However, the current account deficit rose more than 230% to reach $47. Ban in 2010. For the first 11 months of 2011, the current account deficit reached $65. 1 Ban. The high current account deficit has been fueled and sustained by the domestic consumption of imported goods, high-energy imports, and the dependence of the export industry on imported intermediate goods and machinery.
Since Turkey is an energy-dependent country, the cost of importing energy has a major bearing on the current account deficit, with the current account balance directly impacted by energy prices. The runner account deficit makes Turkey susceptible during times of global financial uncertainty.
Unemployment levels in Turkey have historically been high. Average annual growth in employment stood at around 0. 6% during 2002-10, with the highest growth reported for 2010 at 3. 6%. Average annual growth in unemployment stood at around 5. % during 2002-10, with the highest growth reported for 2009 at 27%. The number of unemployed reached 3. 6 million in 2009, with the unemployment rate at 14%. However, the number to unemployed individuals declined in 2 1 million, with he unemployment rate dropping to 1 1. 9% and annual growth of unemployment contracting by 13. 9%. In 2011, Denominator estimates that the unemployment rate fell to 10. 5% and the unemployed population totaled 2. 8 million. Increased unemployment is slowing down economic activity in the country by increasing fiscal pressures.
Future prospects FAT negotiations
Turkey currently has Fats with 15 countries, as well as with the European Free Trade Association, an organization of four non-E European states. Since 2010, the country has signed FAT agreements with Ecuador, Paraguay, Guatemala, Botswana, Benign, Angola, Syria, Libya, Laos, and Spooks. In March 2011, the country announced that it would be holding published 1/2012 page 17 FAT talks with Ethiopia to reduce customs difficulties between the nations. FAT negotiations are currently underway between Turkey and Colombia, and the country also aims to start negotiations with India.
The Turkish lira depreciated around 16% against the dollar in the first three quarters of 2011, and was one of the worst performing currencies in any of the emerging markets. The depreciation has hit the bottom lines of numerous retailers and other impasses. Local companies and multinational corporations that use lira to import raw materials or parts have suffered the most. On the other hand, companies that export local products and services have benefited from the country's stronger export position as a result of the lira depreciation.
There is a risk of renewed downward pressure on the lira, given the increased financial market instability arising from the Euro area fiscal crisis. The depreciation of the currency will make imports costlier in the future given the increasing demand. Published 1/2012 page 18 Social analysis More than half of the Turkish population is under the age of 30. With the rest of Europe facing the problem of an aging population, the country has an opportunity to increase its employment rate by capitalizing on its young labor force.
The government has undertaken several initiatives to implement policies aimed at improving the social benefits it provides its people. To further improve healthcare coverage in the country, which is currently at 80%, the government assigned new staff to areas with a low density of doctors. However, the country suffers from low human development and high infant mortality.
According to the United Nations Development Programmer's (Mound's) Human Development Report 2011, Turkey's Human Development Index (HID) was 0. 699, and the country was ranked 92nd out of 187 countries.
In 2009, the infant mortality rate was 26 per 1,000 live births, compared to the COED average of 4. 4. In 2011, the infant mortality rate dropped to 24, but the low number of physicians and nurses in the country remains problematic. Turkey also suffers from a poor education system.
According to the COED Program for International Student Assessment (PISA) 2009 survey results published in December 010, Turkey was ranked 32nd in scientific literacy out of 34 countries. In the future, economic growth will be led by the knowledge economy, and Turkeys educational system may not be capable of meeting the challenge.
More than half the population of Turkey is aged below 30.
In 2010, the age structure showed that 26. % of the population belonged to the 0-14 age group, 66. 9% of the population to the 15-64 age group, and 6. 2% of the population to the 65+ age group. The median age of the population was around 27 in 2010.
With the rest of Europe facing the problem of an increase in the average age of its population, Turkey has an opportunity to increase its employment rate by capitalizing on its young labor force.
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Current challenges Low HID to be photocopied Turkey has historically performed poorly on various social parameters, mainly cause of its policies on such matters. Turkey has not been successful in limiting disparities of income and wealth and restricting poverty in the country.
In 2010, the percentage of the population in the $10,000+ income bracket was 25. 7%, 38. 7% were in the bracket, and the remaining 35. 6% of the population earned below $5,000. In 2010, 6% of the population survived on less than $2 a day. According to the Mound's Human Development Report 2011, Turkey's HID was 0. 699, and it was ranked 92nd out of 187 countries. The country's Gin coefficient (a measure of income asperity, with zero corresponding to complete equity and 100 to extreme inequity) was 39. 7 for 2000-11. Poor human development is a serious challenge, one the country must tackle going forward.
High infant mortality Turkey has a dismal infant mortality rate, six to seven times higher than most EX. nations. In 2009, the infant mortality rate in the country was 26 per 1,000 live births, compared to the COED average of 4. 4. In 2011, the total number of deaths per 1,000 live births was estimated at approximately 24; despite this decrease, Turkey's infant mortality rate remained the worst in Europe. The low number of physicians and urges (among the lowest of any COED nation), a lack of infection experts, and the insufficiency of several of Turkey's preventive and protective health services are the major causes.
Overhaul of social policies
The Turkish government has undertaken several initiatives to implement policies aimed at improving the social Ben felts it provides its people. The country initiated the Instrument for Pre-Accession Assistance on Rural Development (APART) program to improve social conditions in settlements and regional centers. The program, which will run until 2020, aims to improve the social conditions of people living in rural areas by building hospitals, cultural centers, apartment buildings, roads, power transmission lines, and schools.
The program's objectives also include the modernization of the agricultural sector. Furthermore, the government intends to allocate funds to improve agricultural holdings and the overall performance and competitiveness of the food processing industry, along with the role of manufacturer groups in agricultural markets. This initiative will contribute to the development of the rural economy and promote the formation of micro-enterprises, creating employment opportunities in rural areas.
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