the turkish economy: 2014 and beyond · • promising economy with a bright future as it is...
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The Turkish Economy: 2014
and Beyond
www.americanturkic.org
Orhan K. Osman
President & CEO
American Turkic Business Council DBATexas Turkish American Chamber of
Commerce
OUTLINE
• Turkish Economic History
• Why Invest in Turkey
• Leading Sectors in Turkish Economy and Key Cooperation Areas
• US-Turkish Economic Partnership
Brief Economic History
• State Controlled Closed Economy
• Turgut Özal: Liberal Policies, Open Economy
• Lost Decade: High Inflation, Unstable Coalitions, Weak Leadership
• Three Crisis: 1994, 1999, 2001
• 2002: Whole Collapse of Political Parties
• Reemergence of A Conservative Business Friendly Government
Population
• Turkey has a population of approximately
76.7 million.
• Largest youth population compared with
the EU.
• Half the population under the age 30.4.
• Young, well-educated and multi-cultural population.
Demographic Profile Comparison* (2013)
Turkish Population Prospects: (Million People)
Booming Economy• More than tripling its GDP, reaching USD 820
billion in 2013, up from USD 231 billion in 2002.
• Promising economy with a bright future as it is expected to become the fastest growing economy among the OECD members during 2012-2017 with an average annual real GDP growth rate of 5.2 percent.
• A mature private sector with USD 152 billion worth of exports and an increase of 245 percent between 2004 and 2013.
• 16th largest economy in the world and 6th largest economy compared with the EU in 2013.
Centrally Located
Turkey in the Region
Istanbul (Turkey) is becoming a very international business hub
• Microsoft’s headquarters in Istanbul serves more than 80 countries
• Intel’s Istanbul office reaches out to more than 67 countries
• Coca-Cola’s regional headquarters in Istanbul takes care of 94 countries including the whole continent of Africa, Russia, Eastern Europe, Central Asia, Middle East and all the way to India.
Top reasons to invest in Turkey
Source: Respective Companies
Business Capital for Regional HQs
Multinational Companies (MNCs)
MNCs Number of Countries Managed
from Turkey
Coca Cola 94
GE Healthcare 80
Microsoft 80
Intel 67
Unilever 36
Verifone 30
GlaxoSmithKline 30
BSH 30 Schneider Electric 27
Alstom 26 Ericsson 22
Cargill 20
Pfizer 20
Volvo 18
BASF 18
PepsiCo 14
Dynamic, Stable & Attractive Economy Population
International Hub Access to Multiple Markets
Energy Corridor Structural Reforms
Why Turkey?
• From Istanbul, only with Turkish Airlines you can fly to 104 countries and there is no other airline in the world which flies to that many countries.
• Turkey is a unique country that land in two continents: Asia and Europe. The city of Istanbul is located in between both continents.
• Turkey is a country in the Middle East.• Turkey is a country in Balkans.• Turkey is a country in Caucasus.• Turkey is a Mediterranean country.• Turkey is a Black Sea country.• Turkey is a country with Caspian Sea basin.
Why Turkey?
• A natural bridge between both East-West and North-South axes, thus creating an efficient and cost effective outlet to major markets.
• Easy access to 1.5 billion customers in Europe, Eurasia, the Middle East and North Africa.
• Access to multiple markets worth USD 25 trillion of GDP.
Market Access
Top reasons to invest in Turkey
Source: IMF World Economic Outlook and WTO; GDP, Imports and population figures as of 2012
1,5 billion people; $25 trillion GDP; $8 trillion trade
EUROPE
GDP: $19 trillion Import: $6,5 trillion Population: 670 million
RUSSIA
GDP – $2 trillion Import: $335 billion Population: 142 million
MENA
GDP: $3,8 trillion Import: $995 billion Population: 675million
CENTRAL ASIA & CAUCASUS
GDP: $390 billion Import: $97 billion Population: 82 million
Dynamic, Stable & Attractive Economy Population
International Hub Access to Multiple Markets
Energy Corridor Structural Reforms
Access to Multiple Markets
Infrastructure• Highly developed technological
infrastructure in transportation, telecommunications and energy.
• Well-developed and low-cost sea transport facilities.
• Railway transport advantage to Central and Eastern Europe.
• Well-established transportation routes and direct delivery mechanism to most of the EU countries.
• New rail connection to Georgia, Azerbaijan will connect Turkey to all the way to Eastern Pacific Shores by 2015
Why Turkey?
• Turkey has links with many countries and regions through multinational agreements.
• Member of NATO, allies with the U.S.
• Member of OSCE; Organization for Security and Cooperation of Europe.
• Member of Council of Europe.
• Candidate country for European Union.
• A strategic partner to African Union.
Why Turkey?
• Special link with Arab countries, with Gulf Cooperation Council,
• Founding partner of Black Sea Economic Cooperation Organization.
• Founding member of South European Cooperation Process, South European Countries.
• Shanghai Cooperation Organization.
All these international linkages give Turkey a huge opportunity of trade and also political access.
TURKEY’S FTA’S in EUROPE and AFRICA
EFTAPopulation: 13 million
GDP: 955.8 billion
EUPopulation: 502.1 million
GDP: 15.3 trillion*
IsraelPopulation: 7.6 million
GDP: 217.3 billion
MacedoniaPopulation: 2 million
GDP: 9.1 billion
CroatiaPopulation: 4.4 million
GDP: 61 billion
Bosnia-HerzegovinaPopulation: 4.6 million
GDP: 16.9 billion
TunisiaPopulation: 10.5 million
GDP: 42.2 billion
MoroccoPopulation: 32 million
GDP: 91.2 billionSyria
Population: 20.4 million
EgyptPopulation: 81 million
GDP: 219 billion
AlbaniaPopulation: 3.2 million
GDP: 11.8 billion
GeorgiaPopulation: 6.8 million
GDP:24.3 billion
PalestinePopulation: 4.1 million
GDP: 4 billion
19
FTA Partners
Countries with Ongoing
Negotiations
İsviçre
TURKEY’S FTAsEU (Customs Union)
Population: 502.1 m
GDP: 14,609 b $
Exports: 1.481 b $
Imports: 1.919 b $
Countries with Ongoing
FTA Negotiations
Population : 76,4 m
GDP : 934,4 b $
Exports : 461 b $
Imports : 249 b $
Turkey’s FTA Partners
Population : 210,5 m
GDP : 1.361 b $
Exports : 430 b $
Imports : 442 b $
Turkey’s FTA’s
In Comparison to World
(%)
Population : %49
GDP : %47
Exports : %47
Imports : %44
Countries with which
negotiations are initiated
Population : 2,5 b
GDP : 5.706 b $
Exports : 1.833 b $
Imports : 1.773 b $
GDP Growth Rate of Turkey: (Annual Average)
Growth Rate Projections (%)
Per Capita GDP of Turkey: (USD)
Comparison of Turkey and EuropeReal GDP Growth : (2001=100)
Average Inflation in Periods (%)
Sources: TURKSTAT
Annual Exports: (Billions USD)
Sources: TURKSTAT, 2014
Annual Imports: (Billions USD)
Sources: TURKSTAT, 2014
Foreign Direct Investment: (Billions USD)
FDI by Countries
617589
718
501497 498
209
371
260318
0
100
200
300
400
500
600
700
800
2009 2010
France
Netherlands
Germany
GulfCountries
USA
US Ranks 4th in 2009 and 5th in 2010, accounting for 5% of FDI in 2009
and 4% of FDI in 2010.
Million Dollars
Source: ISPAT
Gross Debt: (% of GDP, 2013)
General Government Debt: (% of GDP, 2014)
LEADING SECTORS IN TURKEY
33
Cement
The biggest exporter in the world
3rd biggest producer in Europe
Natural Stones
Highest exports earning from processed marbles in the world,
second highest exports earning from block marbles
34
5th in the world and 3rd in Europe in the production of ceramic tiles.
2nd in Europe and 4th in the world in the production of ceramic sanitary ware.
Ceramic Products
Jewellery (precious metals and stones)
One of the top 5 jewel producers and exporters in the world.
35
Textiles and Clothing
Industry
• 4th biggest exporter of carpets in the world
• 6th biggest exporter of leather and clothing in the world
• World leader in the production and exporting of socks
• 2nd biggest textiles supplier in the EU
•The biggest home textiles exporter in the world
•6th largest synthetics capacity in the world
Furniture Industry
• 3rd in world exports of
seats convertible into
beds.
Other Major Industries
Leather Articles Industry
• Exporting to more than 140 countries
• Exporting original collections with own brand names
Iron and Steel• Turkey became the 11th largest steel producing country in the world by the
end of 2008• 1st in the exports of construction iron in the world• 10th in the production of raw steel in the world• 2nd in the production of raw steel in Europe
Agriculture and Agro-Industry:
• 1st in the exports of hazelnut, raisin, dried apricot and fig in the world
Glass and Glassware Production:
• 2nd in Europe and 3rd in the world for glass and glassware exports to more than 180 countries
Electrical Equipments and Electronics
In the world Turkey is the
• 3rd biggest exporter of refrigerators
• 5th in the exports of dishwashing machines
• 7th in the exports of washing machines;
In Europe Turkey is the
• 1st in the exports of refrigerators,
• 4th in the exports of dishwashing machines and washing machines
Automotive and Auto-parts Industry
• 3rd largest truck market in the EU
• 7th biggest exporter of commercial vehicles and 6th biggest exporter of bus, midibus, minibus in the world
Contracting Services
31 out of the world’s top 225 contracting companies are Turkish.
Turkey ranks as the 2nd country (following China) in terms of the number of
top contracting companies.
• 94 Countries • 6406 Projects • 206.8 Billion USD
Middle East
(23,8%)
CIS
(48,2%)
Europe
(7,2%)
North America
(0,6%)
Sub-
Saharan
Africa
(0,3%)
North Africa
(20,9%)
TURKISH CONSTRUCTION SECTOR: 2nd in WORLD
Logistics
40
Europe’s biggest truck fleet
(45 thousands trucks and 1,420 companies)
Almost 1.1 million flights in 2012
(2.4 million tonnes freight and 130 million passengers)
25. biggest fleet in the world
48 airports and 76 ports
Total length of divided highways
will reach 15 thousand kilometers.
High-speed railway projects are
carried out rapidly.
41
Tourism
Turkey ranks as the 7th in the world and the 5th in Europe among the most favourite
tourism destinations
Number of Tourists
Revenue (BillionsUSD)
2002 15.214. 514 12.420
2009 32.006.149 25.064
2010 33.070.943 24.930
2011 36.151.328 28.115
2012 36.776.645 29.351
TURKEY’S STRATEGIC POSITION IN ENERGY SECTOR
TURKEY IS AN ENERGY CORRIDOR BETWEEN SUPPLIERS AND CONSUMERSTurkey’s geographic position makes it an important energy and logistics corridor,
linking Europe with the Middle East, the Caucasus and Central Asia.
130 billion $ of investment is anticipated in this sector until 2023
• Considered a natural “energy bridge” between major
oil producing areas in the Middle East and Caspian
Sea regions, and consumer markets in Europe on
the other.
• Located at a close proximity of more than 70
percent of the world’s proven primary energy
reserves, while the largest energy consumer, which
is Europe, is located right to the west of Turkey, thus
making the country a linchpin in energy transit and
an energy terminal in the region.
• Major Transit Point for seaborne-treaded oil and is
becoming more important for pipeline-treaded oil
and natural gas
• Turkey's port of Ceyhan is an important outlet both for current Iraqi oil exports as well as Caspian oil exports.
• Major shipping check point between the Black and Mediterranean Seas.
• Growing volumes of Russian and Caspian oil are being sent by tanker via Turkey‘s bosporus straits to western market ( App. 3.0 million barrels per day (bbI/d ).
REGIONAL HUB FOR ENERGY
• Turkey is a regional hub for the export of gas to central and southern Europe, both from the Caspian Sea and, via the Black Sea, from Russia, as well as from the oil-rich Kurdistan region in Iraq
• $8bn contract with Azerbaijan to build TANAP, the trans Anatolian pipeline connecting the vast Shah Deniz gas field off the coast of Baku to Europe via Bulgaria and Turkey.
• Stretching 2,400 miles (3,850km), the link will transport a whopping 16bn cubic meters (bcm) of gas a year
• Trans Anatolian Natural Gas Pipeline Project (TANAP)
• TANAP satisfies the gas needs of Europe and Turkey.
• This important project provides different types of gas which has been emerged with the cooperation of two brother countries, Turkey and Azerbaijan.
• TANAP is expected to carry 16 billion cubic meters of capacity through the pipeline.
• Will provide $8 billion in investments to local companies in Turkey.
• Turkey would gain not only from the additional transit revenues a pipeline from the Eastern Mediterranean to Europe would provide, but would also be able eventually to import even larger quantities of gas from Lebanon, Syria, Gaza and, possibly Turkish Cyprus, as well as Israel, thereby ensuring its own long-term energy supplies for its rapidly growing industries.
• The expansion of Turkey’s role as a truly intercontinental energy hub would also cement its role as the future center of a vast web of petrochemical complexes, refineries, export terminals, storage facilities, power plants and industrial zones ready to serve both Europe and the Middle East, as well as Central Asia and the Caucasus(www.themiddleeastmagazine.com)
Oil and Gas
Existing Natural Gas Pipelines
Existing Oil Pipelines
Natural Gas Pipelines under Construction
Natural Gas Pipelines Underway
Proposed Natural Gas Pipelines
Oil Pipelines under Construction
FLOW OF THE RESOURCES
Turkey Natural Gas Supply 2012
Turkey’s Crude Oil Supply 2012
• Turkey is revamping its Energy related and
foreign investment policies. This effort will
create excellent opportunity for Service
companies in energy sector, (wind,
exploration, upstream & downstream,
production, pipeline & pipeline
construction), Power Generation,
(Turbines).
Starting Business: Number of Procedures
Starting Business: Duration, Days
Sources: World Bank Doing Business, 2012
Turkey in a nutshell
• 65 millions of GSM Subscribers
• Among the top 6 destinations in the World in Tourism
• 2nd largest manufacturer of Flat glass
• 5th largest jewelry manufacturer
• 1st textile manufacturer in Europe
• 1st TV manufacturer in Europe
• 6th largest cement and cotton producer
• 7th largest iron and steel manufacturer
1,714 Km
Total of Motorways
4,387 Km
Total of State and Provincial Dual Carriageways
Total: 6,101 Km
Dual Carriageway Network
(January 1, 2003)
2,236 Km
Total of Motorways
18,991 Km
Total of State and Provincial Dual Carriageways
Total: 21,227 Km
Dual Carriageway Network
(March 15, 2012)
Before 2003, only 6 cities were connected to each other via dual carriageway. Now, we have 74 cities.
21,227 Km3,125 Km3,061 Km
27,413 Km
Dual carriageways put into serviceDual carriageways under construction
Dual-carriageways to be put out to tender
Total
Dynamics of Transformation
• Mass Urbanization: Reversal of Urban-Rural Population: 75%=> 25%.
• Functioning Number of OIZ’s increased: 12=> 120.
• Transformation in Service Sector: Retail Modernization, Shopping Malls, New Urban Life.
• Political Transformation and More Stable Atmosphere in Ruling Elite.
• New Production Centers like Kayseri, Denizli, Gaziantep, Maras vs Old Centers Istanbul, Izmir, Ankara, Bursa.
• Free Market Capitalism Enacted and Success in Easing Business Making Culture.
Spread of Organized Industrial
Zones
An Industrial Zone in Bursa
Trade Relations between US and Turkey
• Turkey is the 42nd Import Source of USA with
6.7 billion dollars of Imports in 2013. This was
6.28 billions in 2012.
• US Share on Turkish Exports: 0.4%
• The total volume of US Exports to Turkey
was 12 billion Dollars in 2013 and 12.56
billion dollars in 2012, 14.6 billion in 2011.
Turkey is the 21st Trading Partner of the US.
• Turkish Share on US Exports: 0.8%
Trade Relations between US and Turkey
• U.S.-Turkish trade peaked at nearly $20 billion in 2011, $19 billion in 2013.First Quarter 2014, U.S.-Turkey trade stood at $4.5 billion.
• Ongoing U.S.-European Union negotiations to conclude the Transatlantic Trade and Investment Partnership (TTIP) are watched closely by Turkey, given its Customs Union with the EU.
• Turkey remains committed to joining the European Union, however this process has been slow and difficult. While a U.S-Turkey Free Trade Agreement is not being considered at this time, the U.S. has committed to keep Turkey informed of TTIP progress through a joint High Level Committee.
Trade Relations between US and Turkey
• In 2014, Sikorsky announced a major 30-year co-production partnership for the Turkish Utility Helicopter Program, worth up to $8 billion over its life cycle.
• Boeing continues its strategic partnership with Turkish.
• Pratt and Whitney opened a new engine parts facility in Izmir that will supply the Joint Strike Fighter, in which Turkey has partnered.
• General Electric announced a $900 million investment in Turkey across several of its business lines.
Trade Relations between US and Turkey
• In General; American firms are pursuing energy, aerospace, defense and health care projects throughout the country.
• Since 2011, over 50 American firms, mostly small and medium-size companies, have brought their campaigns to the Turkish market
• Turkey is considered a commercial hub of the region, and U.S. companies should consider using Turkish partners to access business opportunities throughout Central Asia, the Caucasus, the Middle East and even Africa. Turkish partners know these neighboring markets well.
Top US Exports to Turkey (in Million Dollars)
2010 2011 2012
Aircraft and Spacecraft 2.320 2.900 1560
Iron and Steel 1.611 2.500 2620
Oil and related products 835 2.100 1354
Cotton 860 1.200 600
Machines, Engines and Pumps 854 952 854
Electronic Equipment 287 479 345
Medical and Technical Equipment 345 396 354
Organic Chemicals 255 382 312
Plastics 315 376 384
Hot Cereals 295 286 475
Top US Imports from Turkey
In Million USD 2010 2011 2012
Vehicles 303.22 684.2 820.2
Machines, Engines,Pumps 400 556.6 590
Iron and Steel 330.2 424.2 720
Stone, Cement, Mica 191.62 318.6 354
Iron or Steel Products 21.58 236.0 390
Other Textiles, Worn Clothing 160.89 219.9 248.5
Textile Floor Coverings 124 163.9 198.3
Oil 12 160.7 165
Aircraft, Spacecraft 124 154.6 175
WHY INVEST IN TURKEY• The second biggest reformer among OECD countries in terms of its
restrictions on FDI since 1997 (OECD FDI Regulatory Restrictiveness Index 1997-2012).
• Business-friendly environment with average of 6 days to set up a company, while the average in OECD members is more than 11 days (World Bank Doing Business Report 2014).
• Extremely competitive investment conditions.
• Strong industrial and service culture.
• Equal treatment for all investors.
• Around 36,950 companies with international capital in 2013 (Ministry of Economy).
• Its close proximity to markets in Europe, the Middle East, and Central Asia, Turkey serves as a regional hub for many of these firms.
THANK YOU!