Turkey's economy has recovered strongly from the 2001 recession thanks to good monetary and fiscal policies and structural economic reforms made with the support of the International Monetary Fund and the World Bank. The independence of the Central Bank has been firmly established, a floating exchange rate system has been put in place, and the government's overall budget deficit has been substantially reduced. In addition, there have been substantial reforms in the financial, energy, and telecommunications sectors that have included the privatization of several large state-owned institutions.

Turkey's economy grew an average of 6.0% per year from 2002 through 2007--one of the highest sustained rates of growth in the world. Despite the 5.0% growth target for 2008, as a result of the 2008 global contraction Turkey's economy was expected to have grown about 3.5% in 2008. Inflation and interest rates have fallen significantly, the currency has relatively stabilized, government debt has declined to more supportable levels (38.5% of GDP), and business and consumer confidence have returned. At the same time, booming economic growth has contributed to a growing current account deficit (-39.0% of GDP). Though Turkey's vulnerabilities have been greatly reduced, the economy could still face problems in the event there is a sudden change in investor sentiment, as seen with 2008 market conditions. Continued implementation of reforms, including tight fiscal policy, and securing independent Central Bank monetary policies is essential to sustain growth and stability.

After years of low levels of foreign direct investment (FDI), Turkey succeeded in attracting $22.3 billion in foreign direct investment (FDI) in January-May 2008. Due to global market conditions which contracted foreign capital inflow, Turkey is expected to attract around $10-$12 billion in 2009. A series of large privatizations, the stability fostered by the start of Turkey's EU accession negotiations, strong and stable growth, and structural changes in the banking, retail, and telecommunications sectors have all contributed to the rise in foreign investment. Turkey has taken steps to improve its investment climate through administrative streamlining, an end to foreign investment screening, and strengthened intellectual property legislation. However, a number of disputes involving foreign investors in Turkey and certain policies, such as high taxation and continuing gaps in the intellectual property regime, inhibit investment. Turkey has a number of bilateral investment and tax treaties, including with the United States, which guarantee free repatriation of capital in convertible currencies and eliminate double taxation.