oreign
investment, improvements in government efficiency, and reduction of
the trade deficit are among the challenges ahead.

Turkey
Turkey's dynamic economy is a complex mix of modern industry
and commerce along with a traditional agriculture sector that in
2004 still accounted for more than 35% of employment. It has a
strong and rapidly growing private sector, yet the state still plays
a major role in basic industry, banking, transport, and
communication. The largest industrial sector is textiles and
clothing, which accounts for one-third of industrial employment; it
faces stiff competition in international markets with the end of the
global quota system. However, other sectors, notably the automotive
and electronics industries, are rising in importance within Turkey's
export mix. In recent years the economic situation has been marked
by erratic economic growth and serious imbalances. Real GNP growth
has exceeded 6% in many years, but this strong expansion has been
interrupted by sharp declines in output in 1994, 1999, and 2001.
Inflation, in recent years in the high double-digit range, fell to
9.3% by 2004 - a 30-year low. Despite these strong economic gains in
2002-04, which were largely due to renewed investor interest in
emerging markets, IMF backing, and tighter fiscal policy, the
economy is still plagued with high debt and deficits. The public
sector fiscal deficit exceeds 6% of GDP - due in large part to the
huge burden of interest payments, which accounted for more than 40%
of central government spending in 2004, and to populist spending.
Foreign direct investment (FDI) in Turkey remains low - averaging
less than $1 billion annually, but further economic and judicial
reforms and prospective EU membership are expected to boost FDI. A
major political and economic issue over the next decade is whether
or not Turkey will become a member of the EU.

Turkmenistan
Turkmenistan is largely desert country with intensive
agriculture in irrigated oases and large gas and oil resources.
One-half of its irrigated land is planted in cotton; formerly it was
the world's tenth-largest producer. Poor harvests in recent years
have led to a nearly 46% decline in cotton exports. With an
authoritarian ex-Communist regime in power and a tribally based
social structure, Turkmenistan has taken a cautious approach to
economic reform, hoping to use gas and cotto