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Turkey: good prospects

Turkey: good prospects for another year of growth NEWS AND MARKETS Even during the Ottoman Empire, Turkey has enjoyed the technological advancements from Europe and access to larger markets in Asia. But its integration with new technologies at the start of the millennium, proved to be a turning point that has created a massive growth cycle for the Eurasian region’s industrial development. Author: Sushen Doshi, International Correspondent for World of Industries Turkey has always been a major trading destination because of its geographic proximity to Europe, Asia, the Balkans and to the energy producing regions in the Caspian and Central Asia. It is a large country with more than 80 million inhabitants and a free-market economy, mainly driven by industries and service sectors, although its traditional agriculture sector still accounts for 25 % of employment. The automotive, petrochemical and electronics industries have grown in importance and surpassed the traditional textiles and clothing sectors within Turkey’s export mix. With the onset of the new millennium, Turkey’s acceptance and integration with the new technologies has created a massive growth cycle for the Eurasian region’s industrial development. Turkey’s economy After Turkey experienced a severe financial crisis in 2001, Ankara adopted reforms as part of an IMF program. The reforms strength- 8 WORLD OF INDUSTRIES 2018

ened the country’s economic fundamentals and ushered in an era of strong growth averaging more than 6 % annually until 2008. Global economic conditions caused the GDP to contract in 2009, but Turkey’s well-regulated financial markets and banking system helped the country weather the global financial crisis, and GDP growth rebounded to around 9 % in 2010-11. Since 2014, productivity and growth has slightly slowed to reveal the underlying imbalances in the Turkish economy. In particular, Turkey’s low domestic savings and large current account deficit means it must rely on foreign investment inflows to finance its growth, leaving the economy vulnerable to destabilizing shifts in investor confidence. Turkey has made great economic strides in the last 15 years and has shown strong growth with an average annual real GDP growth rate of more than 6 %. The GDP rose from $ 230 billion in 2002 to more than triple at $ 850 billion in 2016. It is among the 15 largest economies in the world in terms of purchasing power parity and among the top 6 economies in Europe. In 2016, Turkey had global trade volumes totalling to more than $ 340 billion. The European Union is Turkey’s number one import and export partner, while Turkey ranks 7 th in EU’s top import and 5th in export destinations. Turkey mainly exports machinery, transport equipment and engineering goods to the EU. Rising levels of purchasing power amongst Turkey’s middle class and the high disposable income levels of its major trade partners – mostly the EU countries, provides a much necessary boost to the domestic consumption as well as exports. In the third quarter of 2017, Turkish economy grew by 11 % yearon-year basis, accelerating sharply from a 5.4 % expansion in the previous quarter and beating market expectations of 10 %. It was the strongest pace of expansion recorded since 2011. The OECD forecasts the annual GDP growth to be around 4.5 % in 2018 and 5 % in 2019, driven mainly by household consumption, fixed investment, exports and government spending. Rise of Turkish manufacturing The manufacturing industry is one of the main drivers of the Turkish economy, accounting for roughly a quarter of the total GDP. According to Turkstat, Turkey’s manufacturing industry has been growing at a CAGR of 12 % since 2003. Its top 10 exports include Automobiles and auto components ($ 20 billion), Machinery ($ 12 billion), Gold and other precious metal ($ 12 billion), Electrical machinery and equipment ($ 8 billion), Iron and steel ($ 6 billion). Machinery manufacturing continues to be one of the key growth drivers of the Turkish economy. This sector plays a crucial role in the development of Turkey’s greater manufacturing industry due to Brake technology 4.0 — upgrade now! ROBA ® -brake-checker: Permanent brake monitoring of switching condition, temperature and wear your reliable partner Mayr.indd 1 17.01.2018 13:47:42 WORLD OF INDUSTRIES 2018 9