SWOT Analyses Turkey

Despite the current political turmoil and manifold uncertainties, Turkey remains a significant market and economic partner for German companies. Unfortunately, substantial structural deficiencies counteract fundamentally high growth potential.


With around 79 million inhabitants and a young population with an average age of 31 years, Turkey remains an attractive market and investment location for international companies despite the current political upheavals and geopolitical uncertainties. According to the ambitious plans of the Turkish government, the country is set to rise to be the world's tenth largest economy by 2023, with a gross domestic product (GDP) of two billion US dollars, a per capita income of $ 25,000 and exports of $ 500 billion.



  • Large, dynamic internal market
  • Young, growing population
  • Attractive geographical location
  • Well developed industrial base
  • Motivated workers



  • Internal and geopolitical instability
  • Inefficient education and legal system
  • Heavy bureaucracy
  • High import dependency of the industry



  • Regional energy rotary disc
  • High interest in renewable energies and energy efficiency
  • Massive expansion of energy and transport infrastructure
  • Opportunities for the local production of high-quality goods
  • Interest in industry 4.0


  • Internal and geopolitical instability
  • Inefficient education and legal system
  • Heavy bureaucracy
  • High import dependency of the industry


Demographic bonus as a solid pillar of demand

Young consumers in the cities, which are open to new products and technologies, are an important support for economic growth. Dynamic and risk-prone companies from the private sector are interesting cooperation partners for international investors. After extensive investment in the public infrastructure in the past years, Turkey now has a good basis for the industry. The country-wide business zones, so-called organized industrial zones, also offer favorable production conditions for companies. Last but not least, Turkey, with its geographic location between Europe, the Middle East and Central Asia, is an important hub for economic cooperation.


High dependencies of the industry on import and capital inflows are structural deficits

An important weakness in the Turkish economy is its immense dependence on imported energy sources, raw materials and semi-finished products. Particularly in phases of increased uncertainties, which are characterized by massive capital outflows, a depreciation of the national currency and price increases for imported goods occurs. These, in turn, cause losses in purchasing power and lead to economic downturns. In the case of an extreme widening, foreign exchange bottlenecks are also possible. Given the low domestic savings rate of 13.5% of the economic output and the chronically high current account deficit, Turkey is heavily reliant on capital imports from abroad for financing its large-scale projects and imports. However, these inflows presuppose a high level of confidence.


Energy and transport sectors offer business opportunities

Numerous projects are currently being implemented in the Turkish energy and transportion sector. Investments in electricity generation and distribution are increasingly being made by the private sector. Interest in renewable energies and energy efficiency in industry and in households is also a major factor in the high import dependency of fossil fuels. In addition to renewables, the government relies heavily on domestic coal. Investments in transport infrastructure are concerned with the construction of airports, seaports, motorways, bridges and tunnels. In addition, high-speed trains are being built in the country, and the extension of the rail network in urban transport is being promoted.

Political risks are overwhelming the economy

The main risks to the Turkish economy are currently political. In addition to the domestic tensions resulting from the planned installation of a presidential system and the fight against terrorism, the ongoing unrest in the southern neighbors of Syria and Iraq are concerning. The possible introduction of the death penalty and the unexplained visa fee for Turkish nationals weighed on their relationship with the EU and made the continuation of the accession negotiations more difficult. The loss of confidence in the rule of law has intensified since the failed coup attempt of 15 July. Without confidence-building measures, financing problems could arise due to the lack of capital inflows from abroad.


Source: GTAI (Necip C. Bagoglu)

GSC Team
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Date: 3/23/17