Reducing risks for growth prospects in 2022 and2023 will require well-coordinated monetary and fiscal policies, which will stabilize the economy in the short term and allow to refocus on carrying out Türkiye’s growth potential in the medium term.
International Review: Republic of Türkiye
The new material of International Review series will focus on a multinational country with a rich history, culture and traditions, where values of European and Eastern civilization are mixed, numerous trader routes have been laid, and the land keeps the memory of the three greatest empires: Roman, Byzantine and Ottoman.
Capital: Ankara. Population: 85.6 million people (the country ranks 19th in terms of population in the world (2021) Official language: Turkish National currency: Turkish lira (TRY) Territory: 783,562.38 sq. km (according to area, the country ranks 36th in the world). The Republic of Türkiye is a state in the Middle East. The European part (Thrace) and the Asian part (Anatolia) of the country's territory are separated by the Dardanelles, the Bosphorus, and the Sea of Marmara. Türkiye borders on Georgia, Armenia, Azerbaijan, Iran, Iraq, Syria, Greece and Bulgaria.
Interesting fact: Mount Ararat is located in Türkiye – the legendary landing site of Noah's Ark
Türkiye is a presidential republic, divided into 81 provinces (vilayets), which are headed by governors (valis). Türkiye has been a candidate for EU membership since 2000. Since 1952 it has been a member of NATO. In foreign policy, the priority is the European direction and the deepening of Türkiye’s integration into the European Union. The country maintains active relations with the countries of the Islamic world of Africa.
According to the World Bank, at the end of 2021, the Turkish economy took 19th place in world. The Republic is one of the leaders in terms of GDP among developing countries. Türkiye experienced economy’s speed up recovery as the COVID-19 pandemic eased in 2021. GDP was $810 billion, what is 10% more compared to 2020. This is the best indicator among G20 countries.
However, today the country’s economy is experiencing rising inflation and devaluation of the national currency. In the 4th quarter of 2021, the lira devaluates to an all-time low and peaked at 18% against the US dollar. In March 2022, inflation rose to a recording high level of 61% on annual basis. The central bank used foreign exchange reserves to support lira and the government decreased tax rates.
Experts believe that high inflation will be the main macroeconomic problem in the medium terms. This is stated in a recent World Bank country report. According to the forecast, in 2022, GDP will grow by 2.9%, 2023 – by 3.3%. It is expected that GDP growth will be largely provided by increasing exports to the countries of the European Union and income from tourism.
The key sectors of the Turkish economy are the service sector (34%), industry (22%), trade (16%), transport (11%), construction (10%), agriculture (7%). The Turkish economy is driven by industry and service sector, however 25% of all work places are in agriculture. Automotive, petrochemical and electronic industries in recent years have surpassed such traditional industries as textile and clothing production in the republic’s export structure.
Türkiye is heavily dependent on oil and gas imports, but maintains energy relations with a wide range of international partners and is taking steps to increase the use of domestic energy sources, including renewables, nuclear and coal.
Oil consumption is 35-40 million tons per year, oil production – more than 2 million tons. Import is carried out from Russia and Iran. Natural gas production covers 2% of needs, the rest is imported from Russia, Iran and Azerbaijan. Türkiye plays an important role in gas transit to Europe. Several gas pipelines go through the country, including the TurkStream, Blue Stream and South Caucasus Pipeline. In June 2021, reserves of the Sakarya (405 billion cm) and Amasra (135 billion cm) natural gas fields were discovered in the Black Sea.
Türkiye is one of the leading car manufacturing countries. There are 13 car assembly plants for Renault, Ford, FIAT, Hyundai, Toyota, Honda, Opel, Daimler, Isuzu and MAN. The largest enterprises are located in Istanbul, Bursa, Adapazari, Izmir. Izmit, Aksaray and Mersin.
Main industries: consumer electronics, telecommunications equipment, professional equipment, computer equipment and defense electronics. Televisions, refrigerators, dishwashers and washing machines, microwave ovens, air conditioners are exported to the EU countries. The largest companies in this sector are Vestel, Karel, Arçelik and Beko.
The textile industry is one of the oldest and leading sectors of the Turkish economy. Türkiye produces clothes, shoes, accessories, which are further exported mainly to the European Union market, creating serious competition for goods from India, Korea and China. Textile accounts for a third of job places and over 40% of exports of goods of the republic. Türkiye takes third place in the world in exporting clothes of leather and fur after China and Italy.
Istanbul is the largest center of Turkish fashion and clothing trade. Most garment factories are located in Izmir, Bursa, Ankara, Denizli, Gaziantep, Kayseri, Tekirdag, Adiyaman, Kahramanmarash, Adana, Adapazari, Konya and Mersin.
The largest clothing and footwear manufactures: Çak Group, Mavi Jeans, Saray Hali, Yataş Yatak, Yakupoglu Tekstil, Üniteks Gida Tekstil, Aydinli Hazir, Mintay Tekstil, ASD Footwear, Lescon. Global brands Hugo Boss, Levi Strauss & Co., H&M, Inditex and Benetton Group make their products in Türkiye.
Türkiye’s agriculture employs about 25% of the working population. 27% of the land is cultivated, most of which is privately owned (90%). Agriculture fully meets the needs of the country’s residents.
Interesting fact: Türkiye is the second largest bread consumer in the world
2/3 of the income if the entire industry comes from crop production. From grain crops are grown mainly - wheat, corn, barley, rice, rye, oats, as well as olives, figs, potatoes, hazelnuts, almonds, grapes, cherries, cherries, dates, apricots, quinces, pomegranates, etc.
Interesting fact: Türkiye is the birthplace of agriculture. According to scientists, agriculture originated on the territory of the country about 11 thousand years ago. This is evidenced by data on the diet of the inhabitants of the proto-cities, who consumed barley and wheat
Türkiye is the world leader in the harvest of hazelnuts, cherries, dates, apricots, quince and pomegranates. The republic accounts for approximately 2/3 of the total world production of hazelnuts. In 2021, fruit and nut exports amounted to $5.4 billion.
The tourism industry is one of the most developed in the country. Türkiye ranks sixth in the world among popular tourist destinations. Annually the republic is visited by 25-30 million tourists. By 2023, this figure could rise to 50 million people. According to the Ministry of Culture and Tourism of the Republic, more than 24 million tourists visited Türkiye in 2021. This is 94% more than in 2020, but 45% less than the pre-pandemic level. Türkiye's tourism revenue in 2021 almost doubled compared to 2020 and reached $25 billion.
Interesting fact: the total length of Turkish beaches is about 8 thousand kilometers
Among foreign tourists, the absolute leader in attendance are citizens of Russia, followed by Germany, Ukraine, Bulgaria and Iran. According to Turkish statistics, the cities of Istanbul, Antalya, Edirne and Muğla became the leaders in visiting.
In 2021, Türkiye's merchandise exports totaled $225 billion, up 33% compared to 2020. Imports of goods amounted to $271 billion with a growth rate of 124% compared to 2020. The main trade and economic partners are Germany, China, Great Britain, USA, Iraq, Italy, France, Spain, the Netherlands, Switzerland, Israel, Russia, South Korea.
Türkiye exports transport, equipment, ferrous metals, textiles, plastics, precious metals, stones and their products, ferrous metal products, fruits, nuts, etc. The main imports are fuel, oil, pearls, precious stones, metals and their products, equipment and mechanical parts, ground transportation, ferrous metals, plastics, organic chemicals, pharmaceutical products.
Interesting fact: The oldest and largest shopping center in the world is the Grand Bazaar in Istanbul, built in 1455, shortly after Constantinople was conquered by the Ottomans. Today it is 61 streets, where there are more than 3 thousand stores with a total area of 100 thousand m²
There are three types of special investment zones in Türkiye:
- Technoparks (Technology Development Zones) are territories designed to support research and development, attract investment in the field of high technologies. In total, there are 84 of them, of which 63 are operating and 21 are under construction.
- Organized Industrial Zones are designed to enable companies to operate in an investor-friendly environment with ready-made infrastructure (roads, utilities, social facilities). There are currently 258 organized industrial zones in Türkiye, 95 are under construction. The IPF residents are 67 000 companies employing more than 2 million people.
- Free zones are special areas outside the customs territory. They are created for the development of export-oriented industries and services. In total, there are 19 free zones in Türkiye, located close to the markets of the EU and the Middle East. The Free Zones are strategically located at points providing easy access to international trade routes through ports in the Mediterranean, Aegean and Black Seas.
Interesting fact: Tulips come from Türkiye. They were distributed and brought to Europe by the Ottomans
Cooperation between the Republic of Belarus and the Republic of Türkiye
In 2021, the trade turnover between Belarus and Türkiye exceeded $1 billion (an increase of 1.5 times), Belarusian exports amounted to $360 million (an increase of 3 times), imports - $721 million (an increase of 20%). The basis of exports to Türkiye are products of the petrochemical, metalworking, light and woodworking industries. Imports include agricultural products, knitwear, synthetic yarns, clothing and footwear, parts and accessories for automotive and agricultural machinery.
In 2021, the volume of Turkish investments in the economy of Belarus amounted to $52 million, incl. FDI - $51 million. At the beginning of 2021, 126 business entities with Turkish capital were registered in Belarus. Today, the Belarusian-Turkish Joint Intergovernmental Economic Commission is successfully operating, the last meeting of which was held in Ankara in 2019 with the participation of the administration of FEZ Grodnoinvest.
Cooperation of FEZ Grodnoinvest with the Republic of Türkiye
Currently, FEZ Grodnoinvest is operated by a resident with Turkish capital Europlasteks Invest Ltd., which is implementing 2 projects in the industrial park in Smorgon to organize the production of cotton yarn and the production of steel pipes.
In total, during the period of operation of FEZ Grodnoinvest, $557 thousand of investments were attracted from the Republic of Türkiye. In 2021, the trade turnover of FEZ Grodnoinvest residents with Türkiye doubled and exceeded $10 million, of which $6.5 million is Belarusian exports. These are mainly plywood, phthalic anhydride and products of the chemical industry.
Business relations of FEZ Grodnoinvest with Turkish business are systematically developing and intensifying. In November 2021, the leadership of the administration of FEZ Grodnoinvest took part in the visit of a delegation of official and business circles of the Grodno region to the city of Eskişehir, and in February 2022, an online presentation of the investment opportunities of FEZ Grodnoinvest for Turkish business took place. Recently, the administration of FEZ was visited by the leadership of a large Turkish company interested in organizing the production of chemical products for the agricultural industry on the territory of FEZ.
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