Now we’re really talking Turkey

8 July 2012

Providing a centuries-old bridge between Europe and Asia, Turkey is developing with more than just a hint of Eastern promise. With the 17th largest economy in the world, it is becoming one of the most attractive and dynamic overseas markets for British goods and services.

In 2011 Turkey experienced the fastest growth in Europe at 8.5 per cent – thanks mainly to a strong government financial stimulus package. Prior to that it averaged 6.8 per cent between 2002 and 2007 but this year is expected to slow dramatically. The government claims it will top 5 per cent. The International Monetary Fund believes it will be less than half this. Nevertheless by 2018 Turkey will still probably have the second fastest-growing economy in the world, overtaking those both of Spain and Italy within the next decade.

With a population of 77 million and a well-educated and young workforce, the country is already a member of the EU Customs Union and is negotiating hard for full membership. However, it faces geo-political pressures with its neighbours including Syria and Iraq.

Direct foreign investment is likely to reach £10 billion this year, matching last year’s figures.

Turkey has seen a wholesale modernisation of its economy and business sector. More than 2,200 firms currently do business in Turkey and the UK is Turkey’s fifth largest source of exports from within the EU.

The key export opportunities for British companies is in airports, environment and water, financial services, education and training, ICT, ports and life sciences.

Industry and manufacturing now form a central plank of Turkey’s economy and accounts for a large slice of trade with Europe. Turkey’s economy consists of very diversified services sectors including real estate, financial services along with health and education. Key political, economic and legal reform is taking place.

The government’s official policy is to reduce reliance on imports of manufactured goods and ramp up its own domestic capabilities with a longer term view of becoming a global exporter of hi-tech goods. Another long term aim is for Turkey to become a key European energy hub. It currently has the capacity to transport around 120 million tonnes of crude oil – around three per cent of worldwide consumption - from the Middle East and Caspian fields into Europe. It is adding new pipelines to double this capacity and is planning to open up a Southern Gas Corridor to link Europe with the Middle East and Caspian regions.

The current value of trade between Turkey and the UK is around £5.5 billion a year. British exports to Turkey have risen dramatically over the past three years with a 31 per cent increase in the first half of 2011 and 38 per cent the previous year.

The UK enjoys a number of large business links with Turkey including B, Shell, Vodafone, Unilever, BAE, Aviva and Cadbury. Big High Street retail players include Tesco, Harvey Nichols, M&S and Laura Ashley.

Bribery, corruption and fraud remain prominent in Turkey and businesses need to be extra vigilant, especially since the UK’s far-reaching UK Bribery Act 2010 imposes stiff penalties on firms found guilty of corrupt practices – even if they are unaware of it.