Turkey is one of the largest upper middle-income partners of the World Bank Group (WBG).  With a Gross Domestic Product (GDP) of $ 799.54 billion, Turkey is the 17th largest economy in the world. In less than a decade, per capita income in the country has nearly tripled and now exceeds $10, 500. Turkey is a member of the OECD and the G20, and an increasingly important donor to bilateral Official Development Assistance (ODA). 

Turkey’s rising prosperity has been shared. Between 2002 and 2012, the consumption of the bottom 40 percent increased at around the same rate as the national average. Over the same period, extreme poverty fell from 13 to 4.5 percent and moderate poverty fell from 44 to 21 percent, while access to health, education, and municipal services vastly improved for the less well-off.[1] Since the global financial crisis, Turkey has created some 6.3 million jobs, although increases in the labor force, including through a rise in the participation of women, has kept unemployment at around 10 percent. Turkey’s achievements and future potential have been a source of inspiration for other emerging markets, and the World Bank has recently completed a report[2] describing the country’s experiences in order to share them with interested developing countries.

The EU accession process has been a significant anchor for reforms in Turkey, but progress has slowed in recent years. The EU is Turkey’s largest economic partner, accounting for around 40 percent of Turkish trade. Turkey has benefited significantly from deepening integration with the EU through the growing sophistication of both exports and imports and access to financing. Turkey became a candidate for full EU membership at the Helsinki summit in 1999. Accession negotiations began in October 2005, but progress has slowed in recent years in the face of a number of political obstacles (including relations with Cyprus). Both sides are making efforts to regain momentum, with a focus on economic cooperation, in particular the modernization of the Customs Union and energy relations

Since 2012, however, growth has moderated. In 2013–14 and 2015, election-related uncertainties, geopolitical developments, and concerns over the Government’s handling of corruption allegations dampened confidence and weakened private demand. After growing 4.2 percent in 2013, the economy slowed to 2.9 percent in 2014. Moreover, Turkey has been vulnerable to changes in investor sentiment and, together with other emerging markets, has experienced significant currency and financial market volatility since mid-2013. Moderate growth and a weaker lira narrowed the current account deficit (CAD) to 5.7 percent of GDP in 2014 from close to 10 percent in 2011.

The World Bank Group continues to support the government of Turkey in achieving its development goals through the implementation of a program that is highly focused on results, through lending and the provision of technical advisory services. Strategic areas of engagement include private sector development, public finances, energy, climate change, health, education, environmental management and municipal services.

[1] Extreme poverty and moderate poverty are respectively defined using the World Bank’s Europe and Central Asia regional poverty line of US$2.5 and US$5 per day purchasing power parity.

[2] World Bank, “Turkey’s Transitions: Integration, Inclusion, Institutions” (Washington, DC: World Bank, 2014).




Turkey has been a member of the World Bank Group for more than 60 years, first joining in 1947. The most recent Country Partnership Strategy (CPS) for Turkey 2012—2016 envisages financing levels of US$ 10 billion and the increased provision of analytical and advisory services, as well as new services and instruments, including fee-based services. This latest CPS has three main strategic objectives and pillars:

i)   Enhanced Competiveness and Employment

ii)   Improved Equity and Public Services

iii)   Deepened Sustainable Development

The current CPS (FY12–16) has so far delivered financing of over US$9.2 billion during FY12/15. This includes US$3.8 billion from the International Bank for Reconstruction and Development (IBRD), US$4.4 billion from IFC, and US$982 million from the Multilateral Investment Guarantee Agency (MIGA).

Turkey is IBRD’s sixth-largest client by loans outstanding. The current portfolio is concentrated and strategically focused, with 11 investment projects and US$4.3 billion in net commitments.[1] The investment portfolio supports the energy sector (56 percent), financial and private sector development (13 percent), urban development (29 percent), and health (2 percent).

With a portfolio of around US$4.3 billion, Turkey represents the third-largest country exposure for IFC globally. In FY15, IFC had a third consecutive record year in Turkey, investing US$1.8 billion in projects to support sustainable energy and infrastructure development, improve municipal services, develop PPPs, promote local capital markets, and help Turkish companies increase competitiveness and impact. IFC also advised businesses and government bodies on initiatives to encourage private sector growth.

[1] As of August 31, 2015.




Turkey’s development achievements are impressive, and the country is on track to meet its Millennium Development Goals. The World Bank Group has supported these achievements in selected areas, such as competitiveness, employment, health, education, and the energy sector.

Enhancing Competitiveness and Employment

Turkey is positioned as a typical middle-income country in global competitiveness rankings. It occupies 45th place in the 2014–15 World Economic Forum’s Global Competitiveness Index and is ranked 55th in the World Bank’s Doing Business rankings. Net foreign direct investment (FDI) inflows averaged less than 2 percent of GDP between 2002 and 2014, below China, Russia, Brazil, Mexico, Poland, Malaysia, and other upper-middle-income countries in Europe and Latin America. As a share of all FDI to emerging markets, Turkey today receives roughly the same as a decade ago, after significantly raising its share during the 2005–07 period.

Key achievements supported by the World Bank include:

In addition to financing through lines of credit, Bank support has focused on policies to improve the investment climate; boost SME performance; promote innovation; encourage the start-up of knowledge-based companies; facilitate the commercialization of public research and development (R&D); and enable technology adoption. Bank analytical work has also included a report on Competition Policies, with a focus on professional services, and technical notes on Industrial Land Allocation and Secured Transactions that address specific weaknesses identified in the Doing Business report.

Labor Markets

A major medium-term challenge is to boost the participation of youth and women in the labor force. Despite notable success in job creation in recent years, almost half of the Turkish working-age population (WAP) does not enter the labor market, mostly due to the low labor force participation (LFP) rate of women, which is around 30 percent, less than half the OECD average of 65 percent. About 35 percent of youth, mostly women, are neither working nor attending school—the highest share of inactive youth among OECD countries Labor market rigidity and the high cost of labor are important constraints to job creation in Turkey. Minimum wages are high (the ratio of the minimum/median wage is 69 percent, the highest in the OECD), and Turkey has a very generous severance payment system. The Government has prioritized job creation in the 10th National Development Plan and has recently approved the National Employment Strategy. It foresees a move toward more flexicurity, with reforms to severance pay, unemployment benefits, and temporary work contracts. Furthermore, the Turkish Employment Agency (ISKUR) plans to further boost its activation programs in order to increase the employability of lower-skilled workers. Turkey’s labor force is characterized by a low level of schooling, despite improvements in younger cohorts. More than half the WAP has a formal education of fewer than eight years. Younger workers are better educated and skilled but still lag behind their counterparts in OECD countries. Despite government targets to increase educational attainment, the WAP’s average schooling level will remain a challenge, especially given ongoing structural changes in the economy. The mismatch between the skills obtained in formal education and those required by business is another obstacle for productive job creation. The unemployment rate among higher education graduates increased significantly between 2000 and 2015 and has now reached the rate of vocational/general high school graduates. This is consistent with a mismatch between the skills gained in higher education and those needed in the labor market. Furthermore, business owners and top managers report a shortage of employees with the requisite occupational and socio-emotional skills as an important reason for being unable to fill vacancies.

Key World Bank Group contributions include:

The ongoing Shared Prosperity DPL series supports reform of Turkey’s labor market policies and programs. Other work includes technical advice and studies related to: managing labor markets through the economic cycle; improving labor market flexibility and worker protection; activating and strengthening public employment services and Active Labor Market Programs (ALMPs); and defining and creating good jobs in Turkey. Enhancing job opportunities for women is a major focus of the current program. In this regard, the Bank has been implementing a Swedish International Development Cooperation Agency (SIDA)-funded project to support the increased access of women to economic opportunities in Turkey, together with the Ministry of Family and Social Policies.

Poverty and Social Protection

With rapid economic growth after the 2001 crisis, Turkey’s social outcomes have improved. Poverty decreased from 44 percent in 2002 to 22 percent in 2012. Large inequalities persist, however, and social mobility is still limited. Turkey’s Human Development Index (HDI) increased from 0.671 in 2005 to 0.759 in 2013, putting Turkey in the high human development group. However, Turkey’s inequality-adjusted Human Development Index (IHDI)—which adjusts for inequalities in health, education, and income measures—is 16 percent lower than its nominal HDI. The Government has developed an integrated social assistance system geared toward helping welfare recipients get out of poverty. Social assistance spending has increased rapidly in recent years (from 0.4 percent of GDP in 2003 to 1.26 percent of GDP in 2013), but there is still room to increase benefit generosity, as only about 10 percent of beneficiary household consumption is covered by social assistance transfers. The Syrian refugee crisis, now entering its fourth year, has placed significant strain on the Turkish Government and Turkish host communities. It is officially estimated that there are now 1.9 million Syrian refugees in Turkey, making Turkey the largest refugee-hosting country in the world. Only 13 percent of refugees are living in camps; the rest live outside camps and are mainly settled in urban areas. Key development needs for the refugees and host communities alike relate to education, housing, and employment, with increasing risks of rising poverty given the scale of the crisis.

Key World Bank Group contributions include:

A series of World Bank policy-based loans supported the implementation of Turkey’s social security reforms. A study of Turkey’s social assistance system is being undertaken. Technical assistance is ongoing to help ISKUR improve the targeting and effectiveness of its employment support and activation services, and the World Bank is working with the Ministry of Development on subnational poverty dynamics. In addition, the World Bank is starting work with the Government of Turkey to undertake analysis on the identification and quantification of the impact of the Syrian refugee crisis on host communities.


Turkey has made significant progress in increasing access to schools. As of 2014–15, Turkey had achieved almost universal primary school enrollment at 96.3 percent, with secondary enrollment at 79.4 percent. The Government is actively seeking to expand secondary school enrollment to comply with the new “4+4+4” law on education, which mandates compulsory education up to grade 12. The gender access gap has disappeared in primary education and narrowed significantly in secondary education. In parallel with rising enrollment rates, Turkey’s average PISA performance scores have improved significantly, and inequality in student performance has declined. Looking ahead, Turkey must build on its achievements to further expand quality and broaden access to good education for all. The performance of Turkey’s average 15-year-old is 35 points (almost a full year) behind the OECD average. Around 22 percent of Turkish 15-year-olds do not read well enough to sufficiently analyze and understand what they read and are therefore considered by the OECD to be “functionally illiterate.”

Key World Bank Group contributions include:

Analytical reports on education quality have been prepared in consultation with the Turkish Government. Policy dialogue has focused on school selection, financing, and autonomy, and more recently on higher education financing and quality assurance. Further work on higher education governance is also planned, a topic urgently in need of attention.

Health Care

Turkey’s Health Transformation Program is an inspiration and example to others of how poor health performance can be turned around quickly. In 2003, the Government introduced the Health Transformation Program (HTP) to reform the way health care was financed, delivered, organized, and managed. As a result of the HTP, Turkey has considerably reduced maternal mortality, which fell from 28.5 deaths per 100,000 live births in 2005 to 15.9[1] deaths in 2013. Turkey has achieved near universal health insurance coverage, increasing financial protection and improving equity in access to health care nationwide. Going forward, the key challenge will be to keep costs under control as demand for health care increases, the population ages, and new technologies are introduced. Total health expenditure as a share of GDP has been increasing steadily since 2003, reaching 6.7 percent in 2011, which is on par with countries with similar income levels. As access has widened, the Government has focused attention on efficiency improvements and cost control, while maintaining high-quality services for the entire population. The authorities have launched an ambitious health public-private partnership (PPP) program, aiming to leverage private funding and efficiencies in the management of integrated new hospital campuses, while redeveloping existing hospital buildings as part of ongoing urban renewal efforts.

Key World Bank Group contributions include:

Turkey’s HTP was supported by the provision of two Adaptable Program Loans (APLs). Studies include a joint OECD-World Bank report on health system performance that benchmarked Turkey globally and brought international policy experience to bear on the system. A health sector integrated fiduciary assessment has also been conducted. The most recent studies focused on family medicine practice, hospital autonomy, health financing, and the political economy of the transformation program. The World Bank also supported an international conference on the 10th year of the HTP to share Turkey’s lessons with other countries. A new investment lending operation to support Turkey’s focus on strengthening public health and primary care, increasing the efficiency of hospital management, and enhancing the evidence-based policy-making capacity of the Ministry of Health was approved by the Board in September 2015.

Energy and Climate Change

Turkey’s energy sector reforms have attracted significant private investment and ensured, through a variety of interlinked measures, that capacity has kept pace with the economy’s needs. These measures include legislation regarding electricity, gas, renewable energy, and energy efficiency; the establishment of an energy sector regulatory authority; energy price reform; the creation of a functional electricity market and the large-scale introduction of natural gas; the restructuring of state-owned energy enterprises; and large-scale private sector participation through privatization and new investment. Thus there has been a notable shift toward renewables, as electricity produced from renewable generation facilities increased by 50 percent from 34,000 gigawatt hours (GWh) in 2002 to 51,000 GWh in 2014. Energy efficiency is critical to Turkey’s energy security and a key component in Turkey’s National Climate Change Strategy. A legal, regulatory, pricing, and institutional set-up to promote energy efficiency has been established, including a comprehensive set of energy-efficiency regulations. Climate change is a threat to Turkey and the Government is stepping up its engagement internationally and domestically. Turkey became a party to the Kyoto Protocol in 2009. A National Climate Change Strategy was approved in 2010, and a National Climate Change Action Plan was issued in July 2011. Both foresee a phased approach toward greater mitigation and adaptation efforts.

Key World Bank Group contributions include:

The energy sector is a key area of focus. The World Bank is supporting renewable energy development, increased energy efficiency, improved electricity and gas supply security, the financial viability of the electricity sector, and greater private sector investment in the energy arena. Turkey was the first country to benefit from the Clean Technology Fund (CTF). The Environmental Sustainability and Energy Sector Development Policy Loan (ESES DPL) series[2] has played a central role in supporting the energy sector, enhancing private sector clean technology investments and integrating climate change considerations in policies and programs. Through the World Bank Group, Turkey is participating in the Partnership for Market-Readiness to help implement a greenhouse gas monitoring, reporting, and verification (MRV) system in the power and industrial sectors, and prepare for a possible use of a market-based instrument in the future to mitigate the impact of climate change. An EU IPA-funded technical assistance operation to deepen reforms of the power and gas markets, support energy efficiency, and promote renewable energy integration is under implementation.

Environmental Management and Municipal Services

In the context of harmonization with EU standards, Turkey is developing public policies and incentives that support sustainable environmental management. The demand for quality urban environmental management and municipal services is expected to continue to rise in Turkey. Turkey is experiencing rapid urbanization, with about 72 percent of Turkey’s population living in urban areas, amid expectations that this will increase to more than 80 percent by 2030. Investments to implement the EU environmental acquis are also expected to place an increasing burden on Turkey’s public sector finances over the next two decades. Moreover, citizen demand is increasing for quality urban spaces, better public transport, and more environmentally sustainable urban planning.

Key World Bank Group contributions include:

Development policy lending has supported measures to strengthen environmental management in line with the EU environment acquis. Technical assistance supported the Government’s preparation of a National Watershed Management Strategy, and a cumulative environmental impact assessment was delivered. Two new projects extend this engagement. The Sustainable Cities program expands the existing Municipal Services Project and aims to provide financing to municipalities for the implementation of sustainable development plans and investments, including the high-priority areas of urban transport and energy efficiency. The Integrated Basin Management Project will support the implementation of river basin management plans and pilot investments in two river basins, focusing on the coordination of various public institutions and different water users. Additionally, the Bank has helped upgrade Turkey’s land registration and cadastre system and supported the introduction of new land valuation pilots.

Disaster Prevention and Management

Since the 1999 earthquake, Istanbul has emerged as an internationally noted example of good practices in disaster risk mitigation. Istanbul is implementing a Seismic Risk Mitigation and Emergency Preparedness Project (ISMEP) that is strengthening critical public facilities for earthquake resistance while supporting measures for enforcing building codes and land use regulations. Turkey remains vulnerable to natural disasters, however, particularly earthquakes. The probability of a major earthquake affecting Istanbul in the next 30 years is over 50 percent, while the likelihood of such a disaster in the next decade is around 30 percent. A study assessed that this could result in 87,000 fatalities, 135,000 injuries, and heavy damage to 350,000 public and private buildings. In reaction to this study, 2,500 public buildings, primarily schools and hospitals that would have necessary emergency functions in the aftermath of a disaster, have been prioritized for retrofitting or reconstruction.

Key World Bank Group contributions include:

The World Bank supports the ISMEP, including the retrofitting or reconstruction of public buildings and historical monuments. The institutional support provided to improve overall disaster risk-management capacity in Istanbul has now been tested and used in various emergency situations of heavy snow and floods. Since 2011, the European Investment Bank (EIB) and the Council of Europe Development Bank have been providing parallel financing for this project. The World Bank also supported AFAD, Turkey’s National Emergency and Disaster Management Agency, in mobilizing a US$1 million grant from the Global Facility for Disaster Reduction and Recovery (GFDRR) in 2014 to support preparation and implementation of AFAD’s new national strategy, including vital technical assistance and capacity building.

[1] Government of Turkey, Ministry of Health, “Health Statistics Yearbook” (Ankara: Ministry of Health, 2013). The World Health Organization (WHO) presents the maternal mortality ratio (MMR) for 2013 as 20 percent.

[2] The ESES DPL series consists of the Programmatic Electricity Development Policy Loan (2009), ESES DPL2 (2010), and ESES DPL3 (2012).  





Turkey: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments