- Turkey is energy poor, has very little oil and gas production and therefore imports significant amounts of oil, gas and coal. It has broken free of developing nation status and is on its way to becoming a mature economy. The country has seen an enormous uplift in per capita GDP since 1970 that now stands at $8,500 per capita per annum.
- With borders to Greece, Syria, Iraq, Iraqi Kurdistan and Iran, Turkey is surrounded by chaos. A predominantly Islamic country, it is populated mainly by ethnic Turks (not Arabs) and has an extremely rich history and culture. Let us hope that recent riots in Turkey are not a sign of the rot spreading from its neighbours.
Figure 1 In line with many Islamic nations, Turkey’s population has more than doubled since 1970. But GDP in this energy poor nation has increased 6 fold.
Figure 2 Turkey’s population structure is undergoing the Demographic Transition with slowing birth rates and growing numbers of elderly giving rise to a bee hive shaped population structure as opposed to the pyramidal structure of developing nations.
Figure 3 Turkey has some indigenous coal and hydro production. But total energy production (30 million tonnes oil equivalent – TOE) is well below consumption of 120 million TOE (Figure 4) leaving Turkey with hefty energy imports (Figure 5). Turkey has no significant oil or gas production and BP does not report the statistics. The EIA report crude oil production of 46,000 bpd and gas production of 27 billion cubic feet (BCF) per annum, which are both tiny amounts relative to consumption and are ignored in this analysis.
Figure 4 Energy consumption has expanded 13 fold since 1965. Oil consumption has been flat since the mid 1980s. It would be interesting to know what underlies this statistic. I suspect that car ownership has continued to expand countered by oil-fired power generation being replaced with coal and gas. Most recent growth in energy consumption has been gas and coal. Turkey imports gas by pipeline from Russia, the FSU (Azerbaijan?) and from Iran. It appears imports from Iran have continued despite sanctions. Turkey also receives LNG from all over the world but Algeria is the main supplier.
Figure 5 With energy consumption greatly in excess of production Turkey has significant imports of oil, gas and coal which it pays for through exporting manufactured goods and services like tourism (Figure 6).
Figure 6 Turkey has seen bilateral trade expand strongly and has managed to keep its trade deficit under control despite energy imports and rising energy prices. The cumulative deficit since 1970 is $158 billion which is 25% of current GDP.
Figure 7 Per capita GDP has increased 3 fold since 1970 whilst per capita energy consumption has increased 4 fold. As discussed in Figure 8, Turkey is on an efficient energy-GDP trajectory that seems inconsistent with energy consumption rising faster than GDP. There can be two explanations for this. The first is that Turkey may have a growing number of economically inactive citizens – young, old and unemployed – who consume energy but produce little. The second is that more energy is being used for comfort than for production, e.g. leisure driving and air conditioning.
Figure 8 Turkey, like Egypt, has a very simple energy-GDP evolution where more energy is used to produce more GDP. There is a very strong message here that energy is vital to GDP growth and wealth creation and energy policy should therefore be taken very seriously by all governments. The apparent loss of efficiency in GDP per TOE consumed is explained in Figure 7.
Figure 9 The energy-GDP evolution for Turkey compared with other countries. It should be clear that Turkey is an enormous success story, breaking free from “poor developing” status, on its way to becoming a mature economy and wealthy nation. Its current per capita GDP is similar to oil rich Libya, prior to the NATO led bombing of that country. But Turkey has achieved this through hard work and not simply fortuitous oil and gas flows.