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Successfully investing in Turkey


last updated on 19 May 2021 | reading time approx. 2 minutes




How do you assess the current economic situation in Turkey?

The Turkish economy is experiencing a complex development, with the decline in the value of the Turkish Lira and inflation on the one hand and a young, consumer-consuming society on the other. In 2020, the Turkish Lira suffered a 35 per cent depreciation against the Euro and a 23 per cent depreciation against the US dollar (both compared to the previous year). The inflation rate (consumer price index) rose slightly from 11.84 to 14.6 per cent in spite of the Corona pandemic. The key interest rate of the Central Bank of Turkey was raised by five percentage points to 17 per cent compared with the previous year. The positive GDP growth of the previous year was maintained in 2020. GDP recovered rapidly after a large slump due to the pandemic in the second quarter, particularly in the third and final quarters of 2020 and grew by 1.8 per cent year-on-year overall. GDP growth in 2021 is forecast to be around 5 per cent, assuming that further serious infection waves are absent globally, so that Turkey’s important international markets are stabilised.


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

Turkey, as a growth country, continues to attract foreign investors and is well positioned with different 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 motor vehicles, automotive parts and machinery as a pioneer, has large capacities and good experience with predominantly foreign manufacturers and joint ventures. In addition, the electro technical, household goods and consumer goods sectors are considered as popular and profitable investments

Due to the advantageous geographical location and climate, the still largely undiscovered agriculture and farming as well as seeds and fertilizer technology offer considerable investment potential.

In the energy sector, Turkey offers enormous potential especially in the field of renewable energies and is considered a major growth market.

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


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

    German companies must face up to the following challenges:

    • building trusting partnerships,
    • legal and fiscal issues,
    • political uncertainty and
    • bureaucratic hurdles.

    Expert advice in advance of a planned investment is always recommended.

    High inflation and the weak Turkish Lira are particularly burdensome for domestic market oriented enterprises. The difficult framework conditions of the internal market were met by industry with an increase in export earnings, while currency weakness with an increase in the depth of local value added.


    Would you advise investors in Turkey to be cautious?

    Turkey proved to be largely adaptable during the pandemic year and responded to changing economic conditions with rapid measures and restructuring. Government support through loans at favourable interest rates provided a significant bridging support to the private sector. The constant expansion of digitisation and integration into everyday professional life are also a relevant key to success. The strong potential of a skilled and competitive workforce, a good infrastructure and the central location between Europe and Asia continue to be factors of sustainable growth. The government’s focus on increasing investment, particularly in the regional production and manufacturing industries, as well as in the energy and environmental sectors (e. g. sustainable and renewable energies), points to a good basis for further development.


    In your opinion, how will Turkey develop?

    The encouraging growth figures and the positive forecasts for the future allows to suppose that Turkey will continue to develop positively. Turkey remains competitive as a link between East and West.
Rapid adaptation to the conditions and consequences of the pandemic and the continuing 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. Compared to Europe, the country has good growth rates, a young, well-educated population and, above all, entrepreneurial people. The Turkish economy will be able to grow strongly in the coming years while at the same time limiting inflation. It is now important to curb inflation and thus exchange rate fluctuations, rebalance the current account and strengthen investor confidence.

Due to various experiences of the crisis, Turkey has a certain resilience to the crisis and the consequent ability of the population to act and adapt. This is a significant difference to other countries.

So as a link between East and West, Turkey remains competitive and an important economic partner.


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