BUSINESS IN TURKEY

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Located at the Eurasian crossroads between Eastern European, Mediterranean, Black Sea and the Caspian Sea regions, Turkey has had geographical, political and economic ties with Europe for many centuries. With its network of developed infrastructure and a globally competitive work force, Turkey has become a geo-strategic base for international business. A rapidly growing emerging market of approx. 84 million people makes the country one of the key trading partners of the European Union (EU).

Turkey’s economic legislation is progressively aligning with the main policies and standards of the EU, as a result of the 1995 customs union and the EU pre-accession process.

PRIVATE SECTOR AND ECONOMY

Current economic policy in Turkey envisages increasing the role of the private sector in the economy. The public sector reforms are aimed at the decrease of borrowing requirements and channel excess funds to the more efficient private sector.

Turkey’s network industries and natural monopolies are being introduced to competition by the removal of entry barriers as the state withdraws to a supervisory role in a functioning market economy. Significant number of privatizations will be finalized in the medium term.

On the other hand, the current level of foreign direct investment in Turkey does not affect its qualified labor force, favorable market positioning, high absorption capacity, and tourism potential and strong entrepreneurial spirit.

Turkey also has intense economic relations with the neighboring countries in the Middle East, North Africa and Eurasia. The investment environment will evolve rapidly within the context of a developing macroeconomic framework where sufficient human and physical capital will be deployed as a result of the demographic, social and financial changes taking place.

Turkey offers immense opportunities for European companies in development projects from which they should get higher than usual rates of return. The elimination of political interference in the economy, public sector reform and the consolidation of the financial sector together pave the way to better functioning market economy and sustainable high growth.

GROWTH AND INFLATION

Turkey has attained an average GDP growth of 5.1 % between 2004 and 2006 and is expected to achieve a high performance of 7 (+) percent growth in 2017. A short while ago, the country’s economy has started to feel the negative impact of the developments across the globe such as Covid-19 pandemic as well as the war in Ukraine. That is when Turkish Lira started losing value against US dollar together with sky-rocketing official inflation which is calculated at approximately 85 percent annually (as of December 2022) . The administration has since then been trying to recover the economy via uniqe methods.

The monetary unit Lira has been replaced by YTL (New Turkish Lira) by leaving six zero (‘000.000 ) out of the Turkish Lira. Over 50 banks operate in Turkey, including 15 foreign banks. Within the banking system there is a wide range of very large full service banks, active in both the wholesale and retail banking.

FOREIGN INVESTMENT

Foreign investors are welcome to participate in all kinds of businesses. Imports and exports are unrestricted and exchange control is limited to certain formalities. Foreign investors may invest through authorized banks, investment funds and organizations in Turkey. Real estate can be bought by foreign investment companies foreign subjects within municipal limits.

EXPORT AND IMPORT FIGURES

Based on the above, Turkey was among the 20 biggest economies in the world, until recently. Furthermore, it is an unsaturated market in almost every category of consumption goods, ranging from fast moving consumer goods to high technology products. It is expected that exports will exceed USD 231 billion and 248 million dollars and imports will be around USD 331billion and 98 million (both as of November 2022).

Turkey has experienced a growing foreign trade deficit for quite a while.

EXCHANGE RATES

As for value of Turkish Lira against US Dollar and Euro, Turkish monetary unit has lost MUCH value and the rate of exchange as of 14 December 2022 is approximately “1 US Dollar = 18.64 TL”.

(edited December 2022)