The Tourism Sector’s Contributions To The Turkish Economy

IN TURKEY, THE TOURISM SECTOR HAS A RATHER SIGNIFICANT IMPACT ON THE ECONOMIC ACTIVITY DUE TO ITS SIZEABLE DIRECT AND INDIRECT CONTRIBUTIONS.
Direct Impact Indirect Impact Induced Consumption Impact (Expenditures of those employed in the sector) The Sector’s Total Contribution to the Economy
Products
·         Lodging Investment Spending Food and Beverage Contribution to GDP
·         Transportation Governmental Spending Housing Contribution to Employment
·         Entertainment Impact of Supplier Purchases Clothing
Sectors Household Goods
·         Lodging Services
·         Food and Beverage Services
·         Retail Commerce
·         Transportation Services
·         Entertainment and Culture Services
Expenditures
·         Domestic Personal Travel Spending
·         Domestic Business Travel Spending
·         Foreign Visitor Spending
·         Personal Governmental Spending
The Tourism Sector’s Contribution to the Turkish Economy (%)
Sector’s Direct Contribution to the GDP 5.0
Sector’s Total Contribution to the GDP 12.9
Sector’s Direct Contribution to Employment 2.3
Sector’s Total Contribution to Employment 8.3
Share of Sector’s Investments in All Investments 9.9
  • In Turkey, the tourism sector has a rather significant impact on the economic activity due to its sizeable direct and indirect contributions. While the final sales of products and services by the lodging, transportation and entertainment sectors comprise its direct contribution to the economy, its indirect impact comes through supplier purchases of these sectors, new investments and governmental spending. Furthermore, the expenditures of those employed by the sector create an “induced consumption” effect on the economy.
  • According to the calculations of the World Travel and Tourism Council, tourism sector’s direct contribution to the economy was 5% in 2015. With its indirect contributions and the induced consumption added, this goes up to 12.9%. While the share of tourism sector employees in the total workforce is 2.3%, when we take into account those who work for investors, governmental offices and suppliers that service the industry, the percentage increases to %8.3.
Foreign Trade Deficit vs Tourism Income ($billions)
  • As a foreign energy dependent country, Turkey is structurally prone to having foreign trade deficit and is in need of large amounts of foreign currency. Considering the country’s stock of matured external debts, this need is bound to grow. For this reason, tourism is vital for financing Turkey’s foreign currency deficit.
  • An analysis of recent years shows that the income from tourism is usually able to finance a significant portion of the foreign trade deficit. In 2015, about half of the foreign trade deficit was covered by the income from tourism, but this ratio dropped to 39.5% in 2016. The reason why this drop was not as severe as the drop in the income from tourism is the simultaneous decline in energy prices which caused the foreign trade deficit to recede as well.
Other Sectors that Provide Input to the Hospitality Sector %
Food, beverages and tobacco products 43.1
Real estate services 10.1
Wholesale trade 7.4
Agricultural and hunting-related products and services 7.3
Electricity, gas, steam and climatization 5.0
Land transportation and pipeline transportation services 2.9
Retail trade 2.3
Lodging and food services 1.7
Financial services (except insurance and private pension) 1.5
Coke and refined petroleum products 1.4
Other 17.2
Total Production 100.0
Other Sectors that Receive Input from the Hospitality Sector %
Travel agencies, tour companies 30.4
Wholesale trade 10.1
Health services 5.5
Retail trade 5.0
Lodging and food services 4.8
Government, defense and mandatory social security services 4.0
Financial services (except insurance and private pension) 2.9
Construction 2.6
Security and investigation services; facility and landscaping services 2.6
Training services 2.4
Other 29.6
Total Production 100.0
  • The tourism sector is structurally in close interaction with many other sectors.
  • Developments in the hospitality sector have a significant impact on the sectors that provide input to this sector, such as food and beverage production, real estate services, wholesale trade and agriculture and hunting sectors.
  • On the other hand, the activities of sectors that receive input from the hospitality sector, such as travel agencies, wholesale and retail trade, and health services, are also quite sensitive to the developments in the sector.

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