by Türkiye has been in the process of modernizing and strengthening its economic and geopolitical ties with Europe for years. The country continues to maintain its aspiration to become a full member of the European Union In the near future. In the field of defense, Turkey is part of NATO, where recent international conflicts have revalued its strategic role.
Turkey Economy
The situation of the Turkish economy is traditionally marked by high inflation and monetary depreciation, which are nevertheless offset by the dynamism of activity. The rise in prices was managed to be controlled in 2023, despite being close to 64% at its conclusion. On the other hand, the evolution of GDP in recent years has gone from 11.4% in 2021 and 5.5% in 2022, down to 4.5% in 2023, according to IMF data. Access to low-cost credit promoted by the Turkish government is helping to stimulate production, investment and exports. In addition, measures have been successfully implemented to address some macroeconomic imbalances that have allowed the country’s confidence and credit rating to improve. Regarding employment, Turkey registered an active population of more than 85.2 million people last year and was able to reduce its unemployment rate to 9.4% compared to the previous year. At the level of income distribution, the World Bank continues to consider Turkey as a upper middle income economy.
The structure of the Turkish economy is characterized by weight of the tertiary sector, which accounts for more than half of production. Industry is also a relevant activity, as well as the primary sector which, despite being a much smaller part of the national economy, with 6.2% of GDP, employs one in seven people. The geographical conditions and climate favor the development of a powerful agriculture through the exploitation of a large cultivable area. These favorable conditions have allowed Turkey to be one of the most important international producers of various types of crops, highlighting nuts.
As far as the secondary sector is concerned, industry represents 28.3% of GDP and 27.5% of employment. There is a broad industrial base benefiting from a large domestic market and a young workforce, as well as a highly dynamic private sector driven by a business-friendly environment. The manufacturing industry (22.7% of GDP) focuses on consumer and intermediate goods with low or medium technological content, basic metallurgy, food, automotive, textiles and the chemical sector. Construction has increased its proportion of GDP in recent years, reaching 5.6% in 2023.
The tertiary sector, the most prominent in the Turkish economy, with 54% of GDP and 57.6% of employment in 2023, presents a wide variety of activities ranging from small businesses to large companies dedicated to activities such as transportation, telecommunications or finance. Among the services, tourism deserves a special mention. Thanks to the attractiveness of its historical, cultural and natural heritage, this country is one of the main tourist destinations in the region. In 2023, it received more than 57 million visitors. The financial sector is solid and accounts for 3.3% of GDP. The main banks are national and some of them are public entities. The participation of foreign banks in the Turkish financial system is significant, including the presence of a Spanish entity (BBVA).
Although Ankara is the capital of the country, the main economic focus is located in Istanbul, in whose metropolitan area a good part of Turkish business and industrial activity is concentrated. Other relevant centers are Izmir and Bursa.
Economic infrastructure has improved greatly in recent years and there are important projects promoted by the government for its updating and for the development of new ones in areas such as maritime transport, essential for a country with more than 8,300 kilometers of coastline, airport facilities, rail and road communications or energy and environmental management infrastructures.
The development of the Turkish economy depends greatly on foreign trade, especially to import capital goods and technology, which is offset by the export of products manufactured by labor-intensive sectors, such as metallurgical, textile, automotive, household appliances and agro-industrial sectors. . Türkiye’s main trading partners in 2023 were Russia, Germany and China. The Customs Union with the EU has made it possible to significantly increase exchanges with the European community since 1995.
Türkiye has implemented reforms to encourage foreign investment, improving the reverse environment, increasing public-private partnerships and simplifying procedures. The legislation guarantees freedom of investment and protection against expropriation. Most of the investment that the country receives comes from countries in the European Union.
Spanish-Turkish bilateral relations
Relations between both countries can be described as excellentwith several agreements and conventions in force, high-level bilateral meetings and the support of our country for Turkey’s entry into the EU, in addition to promoting joint initiatives such as the “Alliance of Civilizations”.
Trade exchanges in both directions are reinforced by the EU-Türkiye Customs Union, despite there being certain restrictions that affect certain agricultural products and services. Although the trade balance is usually balanced, recently an unfavorable trend has been observed for Spain due to the strength of Turkish exports, which benefit from better price competitiveness due to the depreciation of the national currency.
The value of Spanish exports of goods in millions of euros reached 6,762 in 2022 and exceeded 8,766 in 2023. Imports from Turkey in 2022 reached 10,093 million euros and fell to 9,120 million at the end of last year. exercise (ICEX).
Spanish exports to Turkey are concentrated in sectors such as automotive, machinery and equipment, textile, metallurgical and chemical. According to ICEX, between 2020 and 2023, more than 100%. Turkish imports to Spain have the automotive and textile sectors as their main sectors. Fuel imports registered a notable increase in recent years.
Regarding investments, the “stock” of Spanish flows in Turkey exceeded 3.9 billion euros in 2021, compared to almost 50 million euros on the Turkish side.
Business opportunities
Türkiye offers a favorable environment for foreign investment due to its importance at the regional level, political stability, strategic location, qualified workforce, size of the internal market and safe environment for investment. It has an important public sector, although it also has a very dynamic private sector, with a mix of SMEs and large industrial groups. The geographical location of the country offers good prospects for using this market as gateway to other neighboring markets from the Middle East and Central Asia.
There are interesting business possibilities in the energy sector, taking advantage of the fact that Turkey is a connection point in the distribution of natural gas and oil between the producing countries of the region and Europe. Hydrocarbon transportation infrastructure is necessary, such as oil or gas pipelines, as well as refineries.
There are also opportunities in building and upgrading infrastructure civil engineering, transportation infrastructure, such as railways, port and airport facilities, hydroelectric plants and renewable energy.
The defense industry In Turkey it is a sector with great potential and possibilities of participation in projects for Spanish companies in the sector. Likewise, business opportunities can open up in the tourism sector driven by the strategy launched by the Turkish government to improve tourism capacity and move towards the sustainability of this productive activity.
Links of interest
