Strong Economic Growth
As an outstanding emerging country, Turkiye’s GDP growth at around 6% on average since 20021, was well above average growth of Emerging Markets at 2.9%2 (emerging and developing Europe), chiefly due to an ideal and rare combination of a stable political environment, sound macro policies and favorable demographics. Combined with strong productivity growth driven by rising share of private sector, strict compliance to fiscal discipline, this trajectory has helped pull staggering inflation rates to single digit levels from around 70% back in year 20013 . Following stellar economic performance, GDP per capita has more than tripled in the last fifteen years, drawing Turkiye to a notably urbanized, upper-middle income country.
The consolidated efforts to meet a series of notable economic targets by 2023 render the outlook to a meaningful milestone, the centennial of the foundation of the Turkish Republic, assuring. Availing itself of a young, educated and skilled human capital, Turkiye is projected to keep abreast of developed countries and become the 14th biggest economy by 2030 and the 9th biggest economy by 20504 .
Investment Driven Growth
A crucial and distinguishing characteristic of Turkish economy is the large and steadily rising share of investments, propelled both by the public and private sectors; such that the share of fixed investment in the economy has doubled to 30% in the last 15 years. Three universally accepted prerequisites to investment-oriented growth are sustainable demand conditions, affordable and readily available financing options and a supportive and effective regulatory infrastructure.
Rising Domestic Demand
With half of the population below the age of 30.2, Turkiye is the largest educated youth population in Europe5 . UN projects that the population will continue to grow by 33% in the next 30 years for which major investments in infrastructure and energy sector are underway and geared to accommodate.
Affordable and Available Financing Options
A well-capitalized and risk-prudent banking system combined with receding real and nominal interest rates owing primarily to credible monetary and fiscal policies drew down public debt to GDP ratio from 69% back in year 2002 to 27% in 20166 , thus providing opportunity for the private sector to borrow at increasingly lower interest rates.
Supportive and Effective Regulatory Infrastructure
Authorities have bolstered feasible investments through generous investment incentive schemes spanning a spectrum of strategic sectors. Additionally, Turkiye pioneers the path of Public Private Partnerships (PPP) globally with mega size cross-sectoral projects such as Istanbul Third Airport, Eurasia Tunnel, Marmaray Undersea Rail Tunnel and Third Bosphorous Bridge. Currently 40% of total global private participation projects is dedicated to CP&I projects in Turkiye alone and the investments for projects in the pipeline is projected to surpass 325 billion USD by 20237.
Foreign Direct Investments
Incentivizing foreign investors with a liberal and progressive investment atmosphere with no pre-entry screening requirements, swift business set-up conditions, corporate tax support, land allocation, energy and R&D support, Turkiye continues to pique the interest and appetite of foreign direct investments which totaled around USD 151 billion in the last decade.
Situated between Europe, the Middle East and Asia, surrounded by three seas, Turkiye enjoys favourable geostrategics. Projects like Istanbul Third Airport, planned as the largest airport in the world and various pipelines such as Turkstream which will expedite rendering Turkiye, located in close proximity to 72% of the world’s proven gas and 73%of oil reserves, a consolidated energy corridor between energy rich and energy hungry countries will allow Turkiye to take the load and lead, turning Turkiye into a strategic hub and a qualified epicenter.
Deploying one of the most liberal trade policies globally, utilizing its new and highly developed technological infrastructure, capitalizing on its geostrategic location with easy access to large markets (1.6 billion customers and an outreach of markets worth USD 24 trillion), and utilizing an agile fiscal mechanism in the region, Turkiye increased its exports multifold over the last two decades, recording an increase of 400 percent between 2002 and 20158.
Emergence of Turkiye Wealth Fund
Turkiye Wealth Fund was established on the aforementioned solid foundations with the aim of furthering development and increasing economic stability in Turkiye by the responsible, transparent, efficient and strategic management of public funds. The fund will create alternative financing methods to support private sector investments especially in strategic sectors geared to strengthen Turkiye’s investment driven growth. By upholding, advocating and instilling a due sense of best practices and corporate responsibility in Turkiye’s key assets, Turkiye Wealth fund will play a catalytical role in driving Turkiye yet further and preparing a better tomorrow for future generations.
1) IMF 2) IMF 3) TurkStat 4) Goldman Sachs 5) TurkStat 6) Treasury 7) PwC Turkiye 8) TurkStat
TURKEY’S STEADY AND HIGH GROWTH OVER THE LAST 15 YEARS (~6% P.A.) IS EXPECTED TO CONTINUE IN THE MID-TERM, WITH A FORECAST OF 3.5%1 P.A.
THE EXPANDING DOMESTIC ECONOMY IS SUPPORTED BY YOUNG, EDUCATED WORKFORCE AND INCREASING POPULATION SHARE OF HIGHER-INCOME HOUSEHOLDS
FISCAL STABILITY REMAINS AT THE HEART OF TURKEY’S SUCCESS, WITH A RAPID RECOVERY SINCE THE 2008/09 RECESSION THE TURKISH GOVERNMENT HARMONIZED MANY LAWS WITH EU STANDARDS AND IS ENGAGED IN AN AMBITIOUS AGENDA TO REFORM ITS LABOR MARKET, LIBERALIZE TRADE AND ATTRACT INVESTMENT
Turkey has been undergoing market liberalization and reform since 2002, and has benefited from $179B in FDI in the last 15 years Turkey’s strong regional position and focus on manufacturing has secured it as a major industrial exporter to the EU and beyond
Across public and private sector, we expect ~$1T in infrastructure upgrades in the next 15 years