Successfully investing in Turkey


last updated on 16 June 2023 | reading time approx.minutes




How do you assess the current economic situation in Turkey?

The Turkish economy continues to show a complex course with the depreciation of the Turkish lira and inflation on the one hand and the consumer-friendly, young society on the other. In 2022, the Turkish Lira depreciated by almost 36 per cent against the Euro and 44 per cent against the US dollar (both compared to the previous year). The inflation rate has risen to over 64 per cent in 2022, while it shows a declining trend in the first quar­ter of 2023. The inflation rate in April 2023 has decreased to 43.68 per cent year-on-year and is almost 7 per cent lower than the previous year's figure. The Central Bank of Turkey's key interest rate was cut several times in 2022; the year ended at 9 per cent. In turn, a key interest rate set by the Central Bank of Turkey of 8.5 per cent has been in effect since February 2023. GDP increased to 905.53 billion US dollars in 2022 (2021: 806.8 billion US dollars). This means that the GDP is also growing steadily compared to the previous year.

How would you describe the investment climate in Turkey? Which sectors offer the largest potential?

Turkey as a growth country continues to be attractive for foreign investors and is broadly positioned with vari­ous industries and resources. The investment decision of large corporations in the past confirms the attractive investment climate in Turkey.

The production and manufacturing sector with vehicles, automotive parts and machinery as pioneers shows large capacities and good experience with mainly foreign manufacturers and joint ventures. In addition, the electrical engineering, household goods and consumer goods sectors are considered popular and profitable investments. 

Due to its advantageous geographic location and climate, the agricultural and farming sector, as well as seed and fertilizer technology, which is still largely undiscovered, offers considerable investment potential. In the energy sector, Turkey offers enormous potential, especially in the area of renewable energies, and is considered a large growth market.

The iron and steel industry, along with other raw materials and minerals, comprise additional development and expansion potential. The same applies to the textile industry, the mechanical engineering, chemical and service sectors and logistics, the entire high-tech sector, telecommunications technology and electronics.

In addition, Turkey offers further opportunities for the shortage of skilled workers in the IT market in Europe. By expanding existing or establishing new locations in Turkey as well as creative recruiting methods, the shortage of skilled workers can be effectively counteracted. Foreign investors also see very good, in many respects profi­table opportunities in Turkey for the global supply chain changes after the pandemic.

What challenges do German companies face during their business ventures into Turkey?

German companies have to face the following challenges in particular:

  • the development of trusting partnerships,
  • legal and tax aspects,
  • political uncertainty
  • fast-moving environment and
  • bureaucratic hurdles.

Expert advice in advance of a planned investment is always highly recommended. High inflation and the weak Turkish Lira are a particular burden on companies focused on the domestic market. The industry countered the difficult conditions of the domestic market with an increase in export revenues, and the currency weakness with an increase in the local depth of added value.

Turkey was one of the few countries to record a growing economy for the pandemic year. How sustainable is the success?

Turkey proved to be highly adaptable, especially in the pandemic year, responding to the changing conditions of the economy with rapid action and restructuring. However, these characteristics continued to be present be­fore the pandemic as well as afterwards. The steady expansion of digitalization, its integration into everyday working life, and digital administration also represent a relevant key to success. The large potential of qualified and competitive labor, good infrastructure and the central location between Europe and Asia continue to be sustainable growth factors. The government's orientation towards increased investment, especially in the re­gio­nal production and manufacturing industry as well as in the energy and environmental sector (e.g. sustainable and renewable energies), points to a good basis for further development.

In your opinion, how will Turkey develop?

The rapid adaptability in a fast-moving economic and social environment as well as the continued growth of the economy maintain the positive outlook for the future. The medium- to long-term opportunities for companies con­tinue to be assessed as good. The country has good growth rates compared to Europe, a young, well-edu­ca­ted population and, above all, entrepreneurial people. Measures to counter the current decline in the value of the Turkish Lira and the accompanying inflation are various stabilization packages related to, among other things, losses from exchange rate fluctuations and the promotion of Lira deposits. 

The Turkish economy can grow strongly in the coming years while containing inflation. The first quarter of 2023 also indicates this for the time being. It is now important to curb inflation and thus exchange rate fluctuations, rebalance the current account and boost investor confidence.

Due to various experiences with crises, Turkey brings with it a certain resistance to crises and the associated ability of the population to act and adapt. This is a significant difference to other countries. As a link between East and West, Turkey remains competitive and an important economic partner.


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