Turkey's economy ranking garners significant interest from investors looking to enter the investment market in Turkey or expand their presence in this market. Therefore, we at Skyline Holdings have prepared this comprehensive article to discuss the most important details of the Turkish economy, its strengths, and future growth expectations.
The global ranking of the Turkish economy in 2023 is 19th worldwide, meaning it still falls within the "Top 20 World Economies," and hence several indicators, the most important of which we will discuss in the following subsections:
The Turkish tourism sector continues to be a bright spot in the economy, with the number of incoming tourists recording a commendable increase of 7.3% in July 2023. This surge reflects the country's attractiveness as a travel destination, thanks to its rich cultural heritage, breathtaking landscapes, and historical sites. This tourist influx not only contributes to the service sector but also supports various related industries, especially real estate, thereby enhancing economic growth.
A notable feature of the Turkish economic landscape in 2023 is the new stance adopted by the Central Bank regarding interest rates in Turkey. The increase in the Turkish lira following a significant interest rate hike indicates the bank's commitment to currency stability and inflation control. The 19.1% yield on 10-year bonds reflects cautious investor sentiments and their desire for higher returns due to perceived market risks. Turkish stocks have also managed to maintain their position above the 7600-point mark, indicating a certain level of investor confidence despite challenges. The 750 basis point increase in the interest rate to 25% underscores the Central Bank's determination to curb inflation and ensure overall economic stability.
The transformation of Turkey's government budget balance into a surplus is a noteworthy achievement, indicating that the government's efforts to manage public finances are yielding positive results. Turkey's recording of its first current account surplus in two years represents a positive development in terms of the country's external balances, indicating that the state is exporting more than it imports. This could have positive effects on the overall economic health and also prove highly beneficial in assessing Turkey's economy ranking for this year.
Official data at the beginning of 2023 showed that Turkey's Gross Domestic Product (GDP) exceeded expectations, with the Turkish economy growing by 5.6% despite numerous challenges and negative forecasts. However, this did not hinder the increase in economic growth in Turkey across various investment and economic sectors.
Data from the Turkish Statistical Institute showed that the GDP for the fourth quarter of the previous year, 2022, grew by 0.9% compared to the previous quarter. The GDP totaled 15 trillion, 6 billion, and 574 million liras. The average income per capita in Turkey during the past year was $10,655, marking economic growth for 10 consecutive quarters.
A survey conducted by Reuters projected that the Turkish economy would grow by 5.2% last year, with fourth-quarter growth reaching 3%. It also forecasted a growth of 2.8% in 2023. Additionally, the World Bank estimated that the earthquake that struck southern Turkey on February 6th of this year would reduce at least half a percentage point from the expected GDP growth this year, ranging between 3.5% and 4%.
However, current data indicate a positive turnaround in this regard, with Turkey's economy ranking in a state of continuous improvement, benefiting from its numerous strengths and various growth indicators.
The confidence index in the Turkish economy rose by 4% monthly in the fifth month of 2023, reaching over 91.1 points compared to April, where it recorded 87.5 points, according to a statement issued by the Turkish Statistical Authority. While the assessment remains below 100 points, it is significantly close to this value, indicating an overall optimistic outlook for the economic situation in Turkey.
Factors Contributing to the Strength of the Turkish Economy
One of the reasons for optimism about the improvement in Turkey's economic ranking is the economy's possession of multiple strength factors, including:
Turkey has a young and growing population, which is a key asset for economic growth. The average age in Turkey is 32 years, compared to 41 years in the United States, meaning Turkey has a large pool of potential workers who can contribute to economic growth.
Turkey is situated at the crossroads between Europe and Asia, giving it a strategic advantage in trade and commerce. Overall, Turkey is also a member of the G20, a group of the world's largest economies.
Turkey enjoys a strong manufacturing sector, which is a key driver of economic growth, representing about 17% of the Gross Domestic Product (GDP) and employing approximately 20% of the workforce.
Turkey is a renowned tourist destination, and tourism revenues have steadily increased in recent years. Tourism serves as a major source of foreign currency for Turkey, helping create employment opportunities and boost economic growth.
Turkey attracts a significant amount of foreign direct investment, which has helped boost economic growth. Foreign direct investment is a vote of confidence in the Turkish economy, facilitating the influx of new technology and expertise, improving the overall economic situation, and enhancing Turkey's economic ranking in the coming years.
The Turkish economy has demonstrated resilience in facing challenges such as the COVID-19 pandemic, the war in Ukraine, and the 2023 earthquake. Economic growth has been consistent in recent years, and it is expected to continue growing in the years ahead.
To be realistic about discussing Turkey's economic ranking, it is essential to address the challenges facing the economic markets in Turkey in the coming years. Some of these challenges include:
Turkey has overcome many previous challenges, both domestic and global, including global pandemics like COVID-19, as well as economic and political crises. This gives us confidence regarding Turkey's economic ranking and its ability to face current economic challenges.
There are several factors that reinforce the hypothesis of Turkey's ability to confront the challenges of its economy, including the following points:
After the presidential and parliamentary elections in 2023 and the popular confidence given to the coalition government for a new presidential and parliamentary term, political stability in Turkey has been enhanced. This is a very important factor in attracting foreign investors and significantly increasing the flow of these investments, which will have a positive impact on Turkey's global economic ranking in the near future.
The government has taken a number of steps to address economic challenges, such as raising interest rates, reducing the budget deficit, and increasing exports, indicating expectations that these measures will succeed. Additionally, the Turkish government has a history of adopting unconventional economic policies and has shown its willingness to learn from its mistakes and make necessary changes.
The Turkish people are resilient and have strong work ethics, which will be an important factor in helping the economy recover from current challenges. Additionally, Turkey has several strengths, such as its young population, strategic location, and strong manufacturing sector, which will help the economy grow in the long term.
In this article, we have provided a comprehensive report on Turkey's economic ranking to guide you at Skyline Holdings in all investment areas that interest you within Turkish territory.
You can always contact Skyline Holdings for all the information you are looking for and to build strong partnerships with us in various economic, investment, and advisory fields in Turkey.
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