Turkey has a strategic geographic location and an open, and increasingly liberal, trade and investment climate. A young and rapidly growing population provides a key ingredient for robust long-term growth potential. Turkey is still a major convergence play for investors, despite brewing political risks and a lack of progress in the EU accession process. While Turkey's public debt load is low by regional standards, the private sector's rampant external borrowing in previous years has greatly increased macroeconomic vulnerabilities.

We keep our clients informed of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective in Turkey. Clients also benefit from in-depth analysis on 25 of the country’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our expert teams. We aim to keep you ahead of the curve, so you can do business with ease in Turkey.

Country Risk

Turkey Country Risk

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Core Views

  • Relative to the past decade, we expect slower, more balanced growth in the next decade on the back of less abundant foreign capital inflows and slower domestic credit growth.

  • Turkey faces a challenging foreign policy environment amidst heightened regional tensions and rising domestic security risks as the government attempts to cement its role as an economic and political power in the region.

  • With the Justice and Development Party (AKP) regaining its parliamentary majority in the November 2015 general election, Turkey will operate under a de-facto executive presidential system under President Recep Tayyip Erdogan, with negative implications for institutional quality and government checks and balances.

  • A collapse of the government's ceasefire with the Kurdish separatist PKK is a major step back for the country,...

Turkey Operational Risk Coverage (9)

Turkey Operational Risk

BMI View:

BMI View: Turkey's labour market inhibits the business environment due to the low skill level of the workforce and limited participation, particularly among females. This means that Turkey is currently unable to harness its favourable demographic situation by turning its large, young population into skilled workers. Consequently, businesses face a heightened need to import foreign professionals and provide additional training for Turkish employees, which entails additional costs and bureaucratic obstacles. Nevertheless, for businesses willing to overcome these risks, Turkey offers one of the largest and most highly...

Turkey Crime & Security

BMI View:

BMI View: Turkey is generally a safe place for foreign business travellers, tourists and expatriates. Although Turkey's overall Crime And Security Risk score is depressed by a relatively high terrorism threat and tense relations with its neighbours, these risks do not pose a great threat to foreign businesses. Turkey scores 39.2 out of 100 in our overall Crime and Security Risk Index, placing it 20th out of 29 countries in the Emerging Europe region.

The most pronounced crime and security risk to business operations in Turkey is from terrorism. Turkey's domestic terror groups...

Turkey Labour Market

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Turkey's labour market inhibits the business environment due to a general lack of education among the workforce and low levels of participation in the formal labour market, particularly female participation. In addition, labour force participation is yet to recover its pre-2008 crisis peak. This means that Turkey is currently unable to harness its favourable demographic situation by turning its large, young population into skilled-workers. Consequently, businesses face a heightened need to import foreign professionals, which increases risks of additional costs and bureaucratic obstacles. Considering these factors, BMI awards Turkey a score of 55.3 out of 100 for overall Labour Market Risk. This equates to 18 th place out of the 30 countries in Emerging Europe, between Azerbaijan and Croatia.

Risks associated with the availability of labour are pronounced in Turkey. At 29.4%, Turkey has the lowest rate of...

Turkey Logistics

BMI View:

BMI View: Turkey offers investors a more highly developed logistics network than most of its peers in the Emerging Europe region. The country's international trade links and port facilities are highly developed, facilitating efficient supply chains for the country's key manufactured goods exports. Investment in inland transportation options will enable the network to cope with growing trade volumes. Consequently, Turkey is ranked third out of 30 states in Emerging Europe in the BMI Logistics Risk Index, with a score of 63.1 out of 100. Although the utilities network offers relatively good reliability, the reliance on fuel imports exposes electricity and diesel supplies to disruption due to geopolitical risks. In addition, water scarcity is becoming an increasingly pressing issue, and will deter investment in water-intensive industries.

Investor sentiment towards Turkey has improved...

Turkey Trade & Investment

BMI View:

BMI View: Turkey's open trade regime and welcoming attitude towards foreign direct investment (FDI) has been significantly undermined in recent years. Political instability is rising due to the government's controversial and polarising agenda, as well as the resumption of hostilities with separatist group, the PKK. This internal conflict has been influenced by the ongoing civil war in neighbouring Syria, with an influx of refugees placing further strain on the Turkish economy. Ankara's growing involvement in the Syrian conflict is also causing problems with neighbouring states and Russia, which has imposed bans on trade and tourism. In addition, stalled bureaucratic reforms and lingering issues over corruption at all tiers of government remain structural issues to be addressed. Nevertheless, the absence of regulatory restrictions on trade and investment means that Turkey is ranked moderately in the...

Turkey Industry Coverage (23)


Turkey Agribusiness

BMI View:

BMI View: We continue to favour the sugar sector in Turkey because of the strong growth potential of the country's confectionery industry and our belief that large changes to the country's sugar production quotas are likely to occur in the coming years. We forecast 2016 to be a turnaround key for the grains sector, with corn, wheat, and barley recovering from contractions following the drought in 2014. What is more, we expect growth in grains production and consumption to continue uninterrupted through to the end of our forecast period in 2020. Meanwhile, we continue to see resilient growth in the livestock sector on the back of continued government support.



Turkey Autos

BMI View:

BMI View: Vehicle sales made on credit will suffer over 2016 as households and businesses aim to reign in their borrowing and as interest rates on commercial loans and auto loans remain high.

Passenger Car and Light Commercial Vehicle Sales
f = BMI forecast. Source: Automotive Manufacturers Association (OSD), BMI

Key Views

  • Sales of heavy trucks and buses to significantly underperform other segments. The introduction of Euro VI regulations caused more pre-emptive...

Commercial Banking

Turkey Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

Consumer Electronics

Turkey Consumer Electronics

BMI View:

BMI View : The latest trade data for Turkey's consumer electronics market reinforces our assessment that lira depreciation against the dollar resulted in a contraction of domestic demand due to reduced affordability, meaning consumers substituted for cheaper models and deferred purchases. We forecast another year of contraction in 2016 as depreciation continues, with the impact of any global economic crises presenting additional downside due to Turkey's economic fragilities. In contrast to this challenging short-term outlook, we expect a return to growth from 2017 as the lira stabilises, which should return the market to a growth trajectory based on rising incomes and vendors tapping low penetration rate opportunities. We forecast a CAGR of 1.0% over 2016-2020 to USD13.04bn in 2020.


Defence & Security

Turkey Defence & Security

BMI View:

BMI View: On the whole, Turkey is one of the more stable countries in the Near East region. That said, the instability in its surrounding neighbourhood is affecting Turkey's regional interests. BMI thinks that international dynamics are bringing Turkey to roll back somewhat its Syrian policy, notably through modification of its previous support of extremist groups in the region. Turkey is continuing its efforts to boost its indigenous defence production capacity are continuing via investments, joint ventures with international companies. From the BMI perspective, Turkey could serve as a potential market to opt for cheaper offshore production processes, although caution is necessary.

We expect that Turkey will spend up to USD20.6bn on defence in 2014. Up to and including 2019, we expect Turkey to spend an average of USD28.4bn on defence annually. We anticipate that Turkey...

Food & Drink

Turkey Food & Drink

BMI View:

BMI View: Rising terrorism risks from the spill over of the Syrian war as well as the sharp decline in tourist arrivals will impact negatively on the growth of Turkey's food and drink industry over 2016. We expect the alcoholic drinks sector will experience the slowest growth as it is largely driven by tourists owing to the country's large and growing Muslim population. The MGR sector will be supported by low-cost retail formats such as discount stores.

Food and Drink Spending

Freight Transport

Turkey Freight Transport

BMI View:

BMI View: Politics will play on the Turkish freight sector in both positive and negative ways in 2016, as sanctions imposed by Russia following the Turks' downing of their aircraft will limit trade in fruit and vegetables, while the re-emergence of Iran once sanctions have been removed will have a positive influence on Turkish trade volumes. A relatively upbeat outlook for economic growth will bolster trade volumes and we are positive across the country's freight modes.

A decisive victory for Turkey's Justice and Development Party (AKP) in the November 1 snap election has been positive for the short-term growth outlook, and this will have a positive influence on trade and freight volume growth. Reduced political uncertainty is reflected in a strong bounce in the November consumer and business confidence, which will support consumption and investment in the coming months...

Information Technology

Turkey Information Technology

BMI View:

BMI View: As is evident in the most recent data for IT hardware imports into Turkey, the market's growth trajectory turned downwards in 2015 as lira depreciation squeezed domestic demand - a trend that was exacerbated by deferred spending due to political unrest. Based on our forecast for economic conditions to remain challenging in 2016, we expect the IT market will only strengthen marginally from 2015, and contract again in US dollar terms due to lira depreciation. The medium-term outlook is however brighter, particularly from 2018, when we expect IT demand growth to resume...


Turkey Infrastructure

BMI View:

BMI View : Factors which inform our long-term bullish view on Turkish infrastructure remain in play. Privatisation of assets and the use of PPPs, a supportive government and a geographic and demographic potential. However, over 2016 and 2017, we expect investment to slow - particularly in the residential and non-residential sectors - as currency depreciation, tightening credit and political risk remain key drags on sentiment.

Latest Updates And Structural Trends

  • We have downgraded our construction industry value real growth forecasts for 2016 and 2017, now 2.1% and 3.7% y-o-y respectively. This is lower than last...


Turkey Insurance

BMI View:

BMI View: Turkey's insurance market is well placed to support robust growth over the medium term. The market is home to a number of well-established domestic providers, working alongside major multinationals which are expanding their presence in the country via growing bancassurance networks and other distribution channels. Domestic economic growth is providing a boost to average household income rates, which will improve the affordability of, and demand for, a range of life products, including investment linked products and retirement schemes. Economic growth is also the key stimulus for growth in the large non-life sector, where demand for products such as credit and financial guarantee insurance is growing steadily alongside established basic lines such as motor and property.

There are some...

Medical Devices

Turkey Medical Devices

BMI View:

BMI View: We expect the Turkish medical device market to fall by a CAGR of 0.7% in US dollar terms over the 2014-2019 period, although growth will be stronger, at 6.3%, in local currency terms. The expansion of healthcare facilities is helping to drive market growth but this will be tempered by poor economic performance. Increasing social tensions and security risks are negatively affecting the economy and Russia has imposed a number of economic sanctions against Turkey.

Projected Medical Device Market, 2014-2019...


Turkey Mining

BMI View:

BMI View: Turkey's mining industry is set to be on the radar of foreign investors in the years to come as the government has undertaken efforts to open up the sector, paving the way for forthcoming investment. The gold sector will attract the largest share of investment as several companies bring their projects into production. Nevertheless, Turkey's extremely poor mining safety record and weak global commodity prices will limit the industry's otherwise healthy growth.

We believe investment into Turkey's mining sector will be forthcoming over the coming years as Prime Minister Tayyip Erdogan pledged to transform the country into one of the 10 biggest economies...

Turkey Mining

BMI View:

BMI View: The mining sector of the Middle East and North Africa will see strong growth in over the coming years, especially given easing sanctions on Iran. With low base effects, governmental will to increase non-oil revenues and significant resources it appears the region is set for strong growth. We highlight Turkey and Northern Iraq as key areas for growth. That said, the region will remain peripheral in the global mining sector as it continues to underperform due to political instability in much of the region.

The key issue in the Middle East's mining sector presently is Iran's ongoing negotiations with Western powers. Our core scenario is for sanctions to be eased from Q116 which will have be a game changer for the country's beleaguered mining industry...

Oil & Gas

Turkey Oil & Gas

BMI View:

BMI View: Turkey will continue to increase its consumption of crude oil, natural gas and refined fuels throughout our medium-term forecast period to 2020, remaining a net importer of all three. Positive exploration results in the Thrace Basin present upside risk to our gas production forecast.

Headline Forecasts (Turkey 2014-2020)
2014 2015e 2016f ...


Turkey Petrochemicals

BMI View:

A weak lira at a time of low oil prices should benefit the Turkish petrochemicals industry, which is showing significantly improved profitability. Growth will be led by the export-oriented automotive industry, while other sectors such as construction will languish.

Capacity growth in ethylene and purified terephthalic acid (PTA) in 2014 had little effect on overall petrochemicals production growth in 2015, with Turkish petrochemicals producer Petkim's output totalled 4.84mn tonnes, down 1.6% year-on-year (y-o-y).

Overall growth rates appeared unaffected by the ramping up of production at Petkim's expanded ethylene plant. This increased capacity from 520,000 tonnes per annum (tpa) to 600,000tpa and the concurrent increase in PTA capacity from 70,000tpa to 105,000tpa has helped lift chemicals output and provided...

Pharmaceuticals & Healthcare

Turkey Pharmaceuticals & Healthcare

BMI View:

BMI View: A strong health care sector and more certain drug pricing policy will drive pharmaceutical sales in value terms over the next 10 years and improve the commercial opportunities for pharmaceutical manufacturers. Despite this positive development, cost containment measures will remain a risk, as will the political situation with neighbouring Syria and nearby Russia.

Headline Expenditure Projections

  • Pharmaceuticals: TRY18.72bn (USD8.56bn) in 2014 to TRY20.81bn (USD7.38bn) in 2015; +11.1% in local currency and -13.8% US dollar terms. Forecast unchanged in local currency and down in US dollars compared with previous quarter due to revised exchange rate expectations.



Turkey Power

BMI View:

BMI View: This quarter our core assumptions for the sector remain largely unchanged. We continue to expect Turkey to remain the most attractive power market in the CEE region this quarter and foresee power demand in Turkey to be robust over the next decade, given the high levels of investment being channelled into its power sector, the country's capacity expansion plans and its improving economic outlook. There is also considerable political backing for power sector expansion as the government continues to strive for greater...

Real Estate

Turkey Real Estate

BMI View:

BMI View: A tentatively improving economy and established banking sector should support growth in the commercial real estate industry in the medium term. However, in the short term the outlook is marred by security concerns, both domestically and regionally, and Russian trade sanctions, which will all dampen investor and consumer confidence.

The government's economic reform agenda, as well as a stable banking sector, provides a good backdrop for commercial real estate growth. However, domestic political issues and regional tensions have raised uncertainty about business and consumer confidence. Geopolitical turmoil from Islamic State (IS) and Russain sanctions, expected to lose the country some USD3.1bn worth of trade in 2016, will weigh in on Turkey's economic recovery. We forecast real GDP growth of 2.9% in 2016, down from 3.3% in 2015. However, the commercial real estate...


Turkey Renewables

BMI View:

BMI View: Turkey will continue to be a key hotspot for renewables in Europe, due to strong government support in form of ambitious 2023 targets and financial incentives for new capacity developments. While short-term political uncertainty and economic volatility could deter some investors, the government will remain firmly behind renewables expansion plans in order to cut fuel import costs and enhance energy security - reinforcing our long-held view that the country will remain a key global renewables market.

Turkey - Headline Renewables Forecasts


Turkey Retail

BMI View:

BMI View: While Turkey's economy has underperformed over the past few years, the recently elected AK Party has vowed to initiate a series of reforms to boost the economy and ensure the country retains its reputation as one of the world's most important economies. Furthermore we believe that new legislation, a recovery of the country's main trade partners as well as steady growth of household income will help generate new growth opportunities in the highly promising Turkish retail sector over the course of our forecast period.

While Turkey is expected rank as the fastest-growing economy among Organization for Economic Cooperation and Development (OECD) member countries in 2017, the economy has distantly underperformed in the past few years. The growth of the country's real...


Turkey Telecommunications

BMI View:

BMI View: The Turkish telecoms market will be driven by advanced technologies, with the launch of LTE services in April 2016 accompanying the development of fibre networks. This will grow the demand for greater usage, enabling operators to monetise their investments, as well as proposing new types of offers, such as convergence, as the market continues its maturation. Nevertheless, we caution that the market may be reaching saturation and organic growth prospects in terms of new subscriber numbers are set to stagnate.

Key Data

  • The mobile market reached 73.16mn subscriptions in December 2015, as all three operators reported growth and a higher percentage of postpaid customers.

  • The demand for data and the growing share of contract users has driven ARPU, which...


Turkey Tourism

BMI View:

BMI View: Turkey's tourism industry is facing difficult issues currently, with regional insecurity and domestic issues affecting tourism into the country and the image of Turkey as a destination. Whilst there are some positive drivers (such as competition in the European airline industry driving down prices) helping boost the overall level of inbound arrivals, they are not sufficient to maintain the high levels of growth seen in the previous few years. One of the most troubling issues facing Turkey is the deteriorating relationship with Russia.

Following the shooting down of a Russian plane in Turkish airspace there has been a ban of selling package trips to Turkey from Russia. As Russia is the country's second largest source market, this could have devastating effects on the tourism industry, especially in areas with a higher propensity to attract Russian tourists (such as...


Turkey Water

BMI View:

BMI View: The country's endemic water pollution issues, particularly from industrial pollutants, highlight the need for further investment into this sector. Additional legislation is also needed, and more rigorously enforced penalties.

Overall, we forecast ground water extraction to increase steadily over the next five years, however this growth will largely be catered to b y surface water sources. This is due to the combination of the fact that the country's ground water reserves are declining, and the number of dams and desalination projects are increasing available surface water. This latter factor is in turn supporting our expectations of moderate growth in consumption (both mains and non mains) as domestic and industrial users alike capitalise on the increase in water availability in many regions. Moreover, additional investment is boosting wastewater...

Latest Turkey Articles

  • We have left our corn forecasts unchanged despite recent price volatility. ...

  • An unsettled political and economic environment in the wake of the Brexit v...

  • Coal- and gas-fired power will be at the centre of energy policy in the CEE...

Latest Turkey Blogs

Latest Turkey Podcasts

  • Central banks across key emerging markets are hiking interest rates in...

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