Turkey Business Overview

Business and Economic Overview

Following several years of decline in nominal GDP, owing to the depreciation of the Lira, the IMF forecasts steady nominal and real growth in Turkey’s GDP. Whilst inflation remains relatively high compared to advanced economies, at 9.3%, it has remained significantly lower and more stable than under the old Turkish Lira and is forecast to gradually decrease in the near future. 

The Turkish market, and export market, has a diversified services sector and large industrial sector. However, the informal sector has previously been estimated between 60-85% of the economy, with an 80% productivity gap when compared to the formal economy.

Turkey ranks 60 of 190 in the World Bank’s Ease of Doing Business Index, and 80 of 190 in the World Bank’s Ease of Starting a Business index. This is owing to a competition based market, the EU Customs Union, excluding agricultural products, and fairly liberal investment laws which do not discriminate.

Nevertheless, challenges do exist. Notably, the current state of emergency and a series of major terror attacks have negatively affected investor sentiment. Corruption, a lack of transparency and the reduced judicial independence also pose further challenges.

A great number of opportunities exist, however. Turkey straddles a key geostrategic location along vital energy corridors for the EU; Turkey has the youngest and fastest growing educated population in Europe; Istanbul’s economy alone is larger than the collective economies of 12 EU nations; Turkey also has the world’s second largest contracting sector alongside vast infrastructure investments. In particular the construction sector has vast scope for investment and exports.

Although Turkish companies usually win contracts, many outsource high-tech products and services. Major projects include TANAP, Turkish Stream, Kanal Istanbul and PPP Health Campuses. Smart city, transportation and medical technologies are all in high demand owing to such projects. Further leading sectors for export and investment include defence and aerospace, the security sector, education, mining and telecommunications. The latter is particularly reliant on imports.