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Turkey

Situated at the crossroads of Europe and Asia, Turkey blends cultural influences from both continents

Total area: 783,562 sq km
Population: 85.8 million 
Government type: Presidential republic
Administrative division: 81 provinces (called “iller”)
Capital + other major cities: Ankara (capital; 5.7 million), Istanbul (15.9 million), Izmir (4.4 million), Bursa (3.2 million), Antalya (2.7 million)
Currency: Turkish lira
Languages: Turkish (official), Kurdish
Ethnicity: Turks 70-75%, Kurds 19%, other minorities 6-11% (Arabic, Zazaki, Armenian)
Religion: Muslim (99.9%)
President: (Mr.) Recep Tayyip ERDOĞAN (since 28 August 2014). Since 2018, serving also as head of government following a constitutional amendment.
Date of EU accession: Official candidate country since 1999

KEY FEATURES

  • From 2022 formally known as Türkiye
  • Geostrategic location between Europe and Asia
  • Second largest military force in NATO after the US
  • Member of the G20
  • Submitted its application to the EU as far back as 1986 (yet Turkey’s chances of becoming an EU member are low)
  • The position of prime minister abolished in 2018, following constitutional amendments
  • In 2023, president Recep Tayyip Erdogan extended his 20 years in power
  • Young population (24% of people under the age of 15)
  • Leading steel producer in the Middle East

MACROECONOMIC OVERVIEW

Turkey is a strategically located market, serving as a bridge between Europe and Asia. It is the 19th largest economy in the world with a robust export industry, especially in textiles, automotive, machinery, and electronics. Turkey has a diversified economy with strengths in various sectors, reducing dependency on any single industry. Its GDP is driven primarily by manufacturing, services, agriculture, and tourism. This diversification contributes to its resilience against economic shocks. The geopolitical position also plays a crucial role in Turkey’s economy due to its location between Europe and the Middle East, influencing trade relations and foreign policy decisions.

Economic growth rates have varied but averaged around 5-7% in the first decades of the 21st century. Inflation has been a concern for Turkey, occasionally experiencing double-digit rates and skyrocketing in 2022. In late 2023, the year-on-year inflation rate amounted to an astounding 61%. The country’s central bank, under political pressure, pursued a counter-intuitive policy of low interest rates in 2022 which contributed to the currency’s depreciation but in 2023, returned to more traditional methods of fighting inflation and raised interest rates to 40%. Turkey remains an attractive investment destination due to its market potential, diverse economy, and strategic location. FDI inflows have been significant, particularly in sectors like manufacturing, energy, and real estate. However, the country’s favourable position has recently been challenged by galloping inflation and the central bank’s weak position in combating it.

In early 2023, two major earthquakes struck southeastern Turkey taking a toll on people’s lives as well as the economy and contributing to the current destabilized macroeconomical situation. The reconstruction efforts are expected to boost Turkey’s already rapidly expanding construction industry.

Selected economic indicators, Turkey, 2016 - 2022

    2016 2017 2018 2019 2020 2021 2022
GDP
 
 
 
 
 
 
 
 
Real GDP growth
%
3.3 7.5 3.0 0.8 1.9 11.4 5.2
GDP at current prices
€ bn
785.6 760.5 658.9 679.1 626.7 690.2 862.3
Foreign trade
 
 
 
 
 
 
 
 
Exports
€ bn
181.3 198 205.8 224.6 182.5 246.7 332.7
Imports
€ bn
198.3 226 206.7 204.5 201.9 243.9 367.2
Balance
€ bn
-16.9 -28 -0.9 20 -19.4 2.8 -34.5
Prices
 
 
 
 
 
 
 
 
CPI – average inflation rate
%
7.8 11.1 16.3 15.2 12.3 19.6 72.3
PPI – industry – average
%
4.3 15.8 27.0 17.6 12.1 43.9 128.5
Employment
 
 
 
 
 
 
 
 
Registered unemployment
%
10.9 10.9 10.9 13.7 13.2 n/a n/a
Average monthly gross wage*
n/a n/a 694 n/a 503 n/a 565
Exchange rates**
 
 
 
 
 
 
 
 
USD/TRY average (TRY per USD)
 
3.0253
3.6462
4.8456
5.6828
7.0194
8.892 
16.575
EUR/TRY average (TRY per EUR)
 
3.3433
4.1206
5.7077
6.3578
8.0547
10.512
17.408

Source: Eurostat, International Monetary Fund, Turkish Statistical Institute, ECB, OECD, Trading Economics, 2016-2022
* The Turkish Statistical Institute monitors this type of data at quadrennial intervals.
** For the current exchange rate, please see www.xe.com

KEY SECTORS

Turkey’s economy reflects a blend of modern industries, traditional sectors, and ongoing efforts to adapt to global economic changes.

While the contribution of agriculture to the GDP (6.5%) has diminished over the years, it still plays a significant role, especially in employment (17.1% according to World Bank statistics). Turkey has a robust export-oriented manufacturing sector (31.9% of GDP), particularly in automotive, textiles, machinery, electronics, and consumer goods. The service sector (51.2% of GDP) is a major contributor to the economy, encompassing finance, tourism, healthcare, education, and more. Tourism, in particular, is an important part of the Turkish economy thanks to its historical sites and coastal attractions.

 

Automotive

Turkey is a major car manufacturer in Europe, with a robust automotive industry that includes manufacturing and export of vehicles and components. The large automotive manufacturers in the country include Ford, Renault and Toyota; the whole industry employs more than 500,000 people. Turkey ranks 13th in global vehicle production and 4th in Europe with the production of 1.3 million vehicles per year. The 30 of the top 50 automotive suppliers have their production facilities here.

Textiles & Apparel

The textile and clothing industry is an important contributor to Turkey's economy, and the country is a significant exporter of textiles, clothing, and fashion items. Its competitive advantage lies in the long tradition of the local textile industry, low labor costs, and proximity to major textile markets in Europe and the Middle East. The country also has rich sources of raw materials, such as large cotton production. The share of textiles and clothing in the country's total exports stands at 4.1% (2022) and in recent years it has contributed on average 7% to GDP. Turkey is the 5th largest textile/apparel exporter in the world and the 3rd largest in Europe. In recent years, the industry has faced fierce competition from Asian producers and will have to replace mass production with higher valued-added products to maintain its market position. There are approximately 20,000 textiles manufacturers and 52,000 apparel manufacturers in Turkey.

Agriculture

Turkey boasts a diverse climate and geographical regions, allowing for the cultivation of a wide range of crops such as grains, fruits, and vegetables and strong poultry and milk production. It is also an important producer of nuts and pulses. The country is self-sufficient in the supply of most products and is a major exporter of agricultural products, particularly hazelnuts, figs, apricots, and dried fruits. It belongs to the top 10 producers in the world. Turkish agricultural exports are crucial for the country's economy and agriculture provides for 6.5% of the country’s GDP. The food industry is the second-largest manufacturing sector after automotive

Home appliances

The home appliance industry in Turkey covers a wide spectrum of products, including white goods (refrigerators, washing machines, dishwashers), small appliances (coffee makers, vacuum cleaners), and electronics used in household applications. The country is the second-largest producer of white goods in the world after China, followed by the US and Poland, and exports 75% of its production primarily to Europe. The market leader is the Turkish company Arçelik who owns brands such as Grundig or Beko and employs 45,000 people worldwide in 9 countries.

EXPORT & IMPORT

Turkey has a realatively robust domestic market but it is still reliant on international trade. Its exports of goods and services/GDP ratio amounts to 38.6%.

 

2022 export and import data:

Main import partners:
Russian Federation – 16.2%
China – 11.4%
Special Categories – 9.5%
Germany – 6.6%
Switzerland – 4.2%

Main export partners:
Germany – 8.3%
USA – 6.6%
Iraq – 5.4%
United Kingdom – 5.1%
Italy – 4.9%
Spain – 3.8%

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