Turkey’s economy recorded impressive 8.8% growth in the second quarter (in 2010), following revised first quarter growth of 11.6%. Turkey’s GDP performed well, despite in the Euro zone and US, thanks to domestic demand and private sector investment spending, and also on the production side, due to respective construction and wholesale & retail investment increases as well financial intermediaries.
For the coming period, we expect moderate Turkish economic performance, as growth expectations for global economies continue to melt. Accordingly, we expect GDP to register 6.2% growth in 2011. The Central Bank of Turkey reduced policy rates to 5.75% from 6.25% in early August on global growth concerns, and is ready to make further expansionary moves should these concerns challenge Turkey’s macroeconomic environment. We expect no further policy rate cuts for the remainder of the year, although the CBT may continue to adjust RRR depending on the pace of lira depreciation. The Central Bank may cut the policy rate by a further 25-50 bps next year,
depending on the global recession.
For the coming period, we expect moderate Turkish economic performance, as growth expectations for global economies continue to melt. Accordingly, we expect GDP to register 6.2% growth in 2011. The Central Bank of Turkey reduced policy rates to 5.75% from 6.25% in early August on global growth concerns, and is ready to make further expansionary moves should these concerns challenge Turkey’s macroeconomic environment. We expect no further policy rate cuts for the remainder of the year, although the CBT may continue to adjust RRR depending on the pace of lira depreciation. The Central Bank may cut the policy rate by a further 25-50 bps next year,
depending on the global recession.
Market Features and Opportunities
Turkey enjoys a very special location at the crossroads between East and West, overlapping Europe and Asia geographically and culturally
- Turkey offers both domestic and export -oriented market opportunities:
- A huge and growing domestic market (approx. 67 million),
- High-income European markets (approx. 600 million),
- Emerging Russia, Caucasia and Central Asia markets (approx. 250 million),
- Diverse and expanding Middle East and North Africa markets (approx. 160 million).
- Turkey has a customs union with the EU and is in the accession process to be a full member.
- Turkey has Free Trade Agreements with EFTA and 14 countries, and 9 more are on the way.
- Turkey is a member of Black Sea Economic Cooperation, Economic Cooperation Organization (ECO), Organisation for Islamic Conference and Islamic Development Bank.
Turkey is at the center of an economic and political area known as “Eurasia”, where three regions of the world, Europe, the former Soviet Union and the Middle East intersect. The proximity to the Balkans and the rest of Europe as well as to the growing emerging markets in Central Asia, the Middle East and North Africa creates unique business opportunities. The experience of more than 7000 foreign capital establishments, including over 100 of the Fortune Top 500 companies, confirms Turkey as a predominant investment location and export platform. US companies like Coca-Cola, Procter & Gamble and Phillip Morris, as well as international investment institutions like the World Bank Group’s International Finance Corporation already have selected Turkey as a regional base.
Turkey is the leading investor in Caucasian and Central Asian Turkic Republics. Due to her strong cultural and historic ties, Turkey provides privileged access and a perfect base to develop business with these countries.
The international image of Turkey in terms of a destination for investment is generally shaped by the diverse market opportunities, both domestic and export-oriented, that Turkey offers. The potential of these markets covers over 1 billion consumers, including:
- A huge and growing domestic market (approx. 75 million)
- High-income European markets (approx. 600 million),
- Emerging Russia, Caucasia and Central Asia markets (approx. 250 million),
- Diverse and expanding Middle East and North Africa markets (approx. 160 million).
Huge and Growing Domestic Market
Turkey's population is approximately 75 million. Turkey is projected to continue to constitute one of the largest populations in the Middle East and Eastern Europe. The domestic market is predominantly urban, with at least 17 major cities having a population in excess of 1 million, led by Istanbul, Ankara and Izmir. The population is much younger than European countries, with over 60% of the population below the age of 35. The improving consumption patterns and purchasing power, with a growing middle class, are important features of the domestic market. The average annual GDP growth rate of 4.6 % over the 1995-2000 period, well above many other countries, implies a continuing robust growth potential. With Turkey’s population growth rate having fallen from over 2% to roughly 1.5%, it is on the verge of entering a ‘golden demographic period’ similar to what East Asia experienced in the 1980s, where the productive working population is largest relative to children and retirees, providing the potential for even more rapid income growth.
Only a few emerging markets in the world have the potential of attracting investment both for export as well as for their domestic market. Turkey is in such a privileged position to create a ‘virtuous investment cycle’, with a more competitive domestic business environment further strengthening Turkey as a platform for exports, and exports in turn stimulating firms to upgrade and better serve the domestic market.
Turkey’s five-month export hit record high
ANKARA—Anatolia News Agency
Turkey’s exports in the first five months of the year hit a record high of $60 billion, the economy minister said.
“Sixty billion [dollars] in the first five months is a first for the Turkish Republic and exports in the past 12 months have exceeded $140.5 billion,” Zafer Çağlayan said at a meeting in Ankara yesterday.
While the European Union grew 1.5 percent last year the European growth figure would be at least 0.3 points higher if Turkey was member of the EU, Çağlayan said.
“This clearly demonstrates that it is the EU that needs Turkey, not the other way round,” Çağlayan said. He added that Turkey’s position within the IMF had changed, stressing that the country would have greater representation in the Fund within the next couple of years.
The Turkish business community was very pleased with the country’s focus on exports said Turkish Business and Industry Association President Ümit Boyner, speaking at the Second Trade Undersecretaries Conference yesterday. She said that the majority of Turkey’s macroeconomic problems had been solved and that inflation was beginning to fall to the single digits.
“Sixty billion [dollars] in the first five months is a first for the Turkish Republic and exports in the past 12 months have exceeded $140.5 billion,” Zafer Çağlayan said at a meeting in Ankara yesterday.
While the European Union grew 1.5 percent last year the European growth figure would be at least 0.3 points higher if Turkey was member of the EU, Çağlayan said.
“This clearly demonstrates that it is the EU that needs Turkey, not the other way round,” Çağlayan said. He added that Turkey’s position within the IMF had changed, stressing that the country would have greater representation in the Fund within the next couple of years.
The Turkish business community was very pleased with the country’s focus on exports said Turkish Business and Industry Association President Ümit Boyner, speaking at the Second Trade Undersecretaries Conference yesterday. She said that the majority of Turkey’s macroeconomic problems had been solved and that inflation was beginning to fall to the single digits.
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