Economic Studies


Population 79.8 million
GDP per capita 10,817 US$
Country risk assessment
Business Climate
Change country
Compare countries
You've already selected this country.
0 country selected
Clear all
Add a country
Add a country
Add a country
Add a country


major macro economic indicators

  2015 2016 2017(f) 2018(f)
GDP growth (%) 6,1 2,9 5,5 4,9
Inflation (yearly average, %) 7,7 7,8 10,9 9,3
Budget balance (% GDP) -1,0 -1,1 -2,0 -1,9
Current account balance (% GDP) -3,7 -3,8 -4,6 -4,3
Public debt (% GDP)* 27,5 28,1 28,5 28,5

*EU-defined general government’s debt stock (f): forecast





  • Demographic vitality
  • Large population with rising middle income class
  • Strategic geographic location
  • Well-developed industrial base
  • High capacity of creating employment


  • Domestic and geopolitical instability
  • High dependence on external borrowing
  • High import reliance of the industry
  • Security risks


Solid growth buoyed by fiscal measures, domestic demand and exports

Turkey is expected to record strong growth rates in 2018 after experiencing several shocks – such as a failed coup attempt, sharp depreciation of the lira, and security issues – in 2016 and 2017. Growth is set to be stimulated by government support, private consumption, investments, and exports. However, rising inflationary pressures, a weaker lira, and tax hikes are likely to weigh on domestic demand, which in turn may impact domestic-driven sectors’ performances. In early 2017, the government decided to increase the size of the credit guarantee fund (CGF) to ease small and medium companies’ access to financing. The size of the fund has been raised to TRY 250 billion (USD 63 billion, nearly 7% of GDP). Rising capacity utilisation and improving business sentiment are expected to sustain private investment, yet the pace of growth may lose some momentum as the impacts of the CGF fade away.

Exports are set to remain strong in 2018 on the back of the steady growth in Western Europe, Turkey’s main trading partner. A continued depreciation of the lira will admittedly help boost exports, but remains the main risk for Turkey’s import-dependent economy in the upcoming period. Non-financial private sector’s short-term foreign currency denominated debt stood at USD 44 billion as of the second quarter of 2017. Any additional weakness of the lira will increase the debt burden and the costs of imported inputs for the manufacturing sector. A likely rate hike process from the central bank to counter the currency weakness and inflationary pressures would, on the other hand, add to borrowing costs. This scenario would deteriorate cash flow management of Turkish companies, who suffer from a structural undercapitalisation.


Twin deficits: a cause for concern

While promoting banks’ lending, the government’s CGF programme pushed the banking sector’s loan to deposit ratio as high as 125% in the second quarter of 2017. This situation increases currency risks and dulls the rebalancing of the current account deficit. The widening of the budget deficit was related to higher interest expenditures, capital transfers, and current transfers. In total, non-interest expenditures rose by 17.8% year-on-year in the first seven months of 2017, while interest expenditures increased by 11.8%. Further widening of the deficit was prevented by a recovery in revenues.

The higher fiscal deficit also raises the treasury’s borrowing requirements. Between January and September 2017, the treasury’s total eurobond issuance reached USD 9.1 billion, although the planned annual amount was only USD 6 billion. Domestic debt roll-over ratio of the treasury rose to 154.6% in September 2017 from 90.6% annually in 2016. Off-balance sheet stimulus measures may represent upside risks to debt levels if they are realized, as the government may need to assume liabilities mostly due to the public guarantees given under the Public Private Partnership (PPP) projects. Although expansionary fiscal policy is likely to be gradually scaled back in 2018, the average fiscal deficits may continue to remain high ahead of the elections in 2019, compared to previous periods. Further deterioration of fiscal dynamics may weigh on investors’ sentiment and interest rates.

The structural lack of savings will likely continue to be the economy’s Achilles heel in 2018. The current account deficit is expected to decrease somewhat on the back of slower GDP growth, but the recent recovery in energy prices will increase the import bill further. Against this backdrop of significant current account deficit, the economy remains dependent on volatile and short-term external financing, and continues to be vulnerable to exchange rates’ volatility and exit strategies of major central banks. Indeed, FDI – still deterred by regional geopolitical tensions – are not significant enough to offset the current account deficit.


Lower political noise, rising geopolitical tensions

Following the April 2017 referendum regarding a vote on constitutional amendments that would transform the country from a parliamentary democracy into a presidential system, political noise has eased in Turkey. Additionally, improving relations with Russia, Iran, and Iraq’s central government have allowed the country to strengthen its regional cooperation and commercial flows. However, the uncertain relationship between Turkey and the European Union, as well as recent tensions with the United States, should be monitored closely, as they may have economic impacts if tensions rise. Turkey has planned three elections for the near future, with the first – local elections – set to take place in March 2019. If domestic political tensions increase ahead of this, then the economy may be negatively impacted, as it would increase risk aversion against Turkish assets. 


Last update : January 2018



In the domestic market, traditional instruments for credit payment are still in common use as they not only constitute a means of payment but also can often serve as negotiable instruments.


This is the case for promissory notes in regular use for commercial transactions by smaller and medium-sized companies. Similarly, with the postdating of cheques a commonplace practice, the cheque serves as both a title of payment and a credit instrument. Cheques circulate in the domestic market as negotiable instruments until the maturity date.


The new law on cheques, in force since December 2009, focuses on protection of the rights of cheque holders (beneficiaries) and institutes three categories of cheques – cheques for business users, cheques for consumers, and pre-printed bearer cheques – to facilitate tracking this payment instrument and to combat the underground economy.


Although banks are now required to exercise greater vigilance as regard the profile of their clients, the law also provides for large financial sanctions payable by the drawer of the cheque in case of non-payment.

Likewise, according to the amendment on 3 February 2012, the drawer of a dishonoured cheque will be banned from drawing cheques and / or opening cheque accounts for 10 years, by decision of the public prosecutor (administrative sanction instead of penal sanction).


There are, as such, particular advantages deriving to creditors from the use of negotiable instruments like bills of exchange, promissory notes, and cheques – provided they have been duly established and that any legal action is taken within the legal limitation period. They enable creditors, without obtaining a prior ruling, to approach directly the enforcement office (Icra Dairesi) for service on the debtor of an injunction to pay and then, as necessary, to proceed with the seizure of the debtor’s assets.


The debtor has 10 days to settle the arrears in question or 5 days to approach the enforcement court and to oppose payment on grounds that, for example, the signature on the document is not his own or that the debt no longer exists. In case of opposition on abusive grounds, the debtor is liable to large penalties.


Finally, for rapid and secure processing of bank transfers, the SWIFT electronic network is well-established in Turkish banking circles and constitutes the most commonly used instrument for international payments.


Debt Collection


Out of court settlement is always advisable to taking legal action, and as a result, the sending of formal notice to pay, followed up by repeated telephone calls, remains a relatively effective method. As well, on-site visits can moreover pave the way for restoring communication between the supplier and his customer and thereby enhance the chances for negotiating a transaction.


Depending on the debtor's solvency, the terms the transaction can range from payment in full to repayment by instalments, or even to a partial payment as final settlement.


In the absence of a voluntary settlement, the threat of a bankruptcy petition (iflâs) is a frequently employed tactic to elicit a response from the debtor and prompt him to repay the arrears.


In cases where the validity of the claim is disputed, the only recourse is to initiate the ordinary proceedings via a summons to appear in court.


In cases whereTurkeyhas not signed a bilateral treaty or a reciprocity treaty with the plaintiff’s country, the plaintiff will be required to put up a surety bond,judicatum solvi, representing about 15 % of the claim, with the competent local court. It's the same with a Turkish applicant who has no permanent residence inTurkey.


At the commencement of the proceedings as well, the plaintiff must also put up one quarter of the court fees, which are proportional to the amount of the claim.


The ordinary proceedings are organized in three phases: first phase involving position statements by each party (statement of claim and statement of defence); then in a second and longer phase, the court investigates the case, examining the relevance of the evidence submitted, whether conclusive or discretionary evidence ; and finally in the main hearing that constitute the third phase, the court hears the parties and their lawyers and issues a ruling.


The civil procedure code specifically states that the judge may at any time during the legal action encourage amicable settlement of the dispute, provided that it results from a real desire by the parties to seek an out-of-court settlement via a negotiated transaction.


The “LAW ON MEDIATION IN CIVIL DISPUTES” (Law No. 6325) has entered into force completely on June 22,2013. The Law stipulates that mediation shall be applied only in the resolution of private law conflicts, including those having a foreignness element, arising from acts or transactions of interested parties who have the capacity to settle such conflicts.


In this context; mediation is defined as “a method of voluntary dispute resolution system carried out with the intervention of an impartial and independent third party who is specially trained to convene the relevant parties by way of systemic techniques and with a view to help such parties mutually understand and reach a resolution through a process of communication”.

Mediation is, first of all, is a dispute resolution system. However, this resolution system is a voluntary dispute method.


Here, the parties create their own ways of solution by themselves and they try to understand each other while doing this. Mediation is based on the principle of doing meetings and negotiations and is entirely a process of communication. While the parties are creating their own ways of solution, an impartial and independent third party (a mediator) who enables the parties to establish communication, have meetings, understand each other shall be included in the process.


On the other hand, the parties are free to apply to a mediator, to continue the process, to finalize or to abandon the process.The parties may also settle on the issue of applying to a mediator before the filing a lawsuit or while the lawsuit is pending; and the court may advise, encourage the parties to apply to a mediator.


The commercial court (asliye ticaret mahkemeleri), which is a specialized chamber of the court of first instance, is competent to hear commercial disputes and insolvency proceedings. Commercial courts exist in the main Turkish cities.


To combat against lengthy lawsuits and courts workload, the new civil procedure code, effective as of 1st October 2011, aim to accelerate and simplify the proceedings.


Also, the parties have to submit their arguments of defence, their counter claims and available evidence at the commencement of the trial. These documents will be reviewed by the court during a preliminary hearing, in the course of which the parties will be encouraged to compromise.


The litigants’ examinations and cross examinations will now be conducted by lawyers to discharge the judges who had so far a great tendency to resort to expert opinions to assist them in the content of the judgment. That is why, the new code limits the list of technical and scientific experts registered with the Ministry of Justice.

  • English