WORLD OF INDUSTRIES - MOTION, DRIVE & AUTOMATION 1/2017

Turkey: opportunities
despite Turbulence
NEWS AND MARKETS
For Turkey, 2017 began on a hurtful note with the
attacks in Istanbul; the entire world expresses their
condolences and support to Turkey and its people. But
in my regards the best way to beat the narrative of the
disruptive forces is by not letting them derail the cycle
of growth and development in the region.
Turkey is a key ally to both, Europe and the United States. A longstanding
member of NATO and a candidate for membership
in the European Union, it has strong ties to the West and has long
served as a bridge to the East in a volatile, yet extremely strategic
region. The collaboration between Turkey and Germany or Europe,
in the context of technology and industry has been progressive ever
since the Ottoman Empire. Since then, a large number of technology
based corporations like Siemens and Schneider Electric have
been the first to introduce many innovative technologies in Turkey,
for example, establishing the telegraph system in mid-1800s, supplying
heavy industry products to the Ottoman Navy, laying the
electricity network in 1914 even during the first world war or bringing
the fiber optic cable on the Bosphorus bridge in 1986. 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 and role of industry
In the broad frame of economics, Turkey has definitely been a
success story in this century so far. In the last 15 years, Turkey has
shown robust macroeconomic growth with an average annual real
GDP growth rate of 4.7 %. The GDP rose from $ 230 billion in 2002
to more than triple at $ 720 billion in 2015. The country has undergone
profound transformation over the last decade to solidify its
economic foundation. It is the 16th largest economy in the world
in terms of purchasing power parity and the 6th largest economy in
Europe. In 2015, Turkey had global trade volumes totalling to more
than $ 315 billion, of which approximately 40 % was with the EU 28
countries, followed by China, Russia, USA, South Korea and Iran.
The EU is Turkey’s number one import and export partner while
Turkey ranks 7 th in the EU’s top import and 5th in export markets.
Turkey’s exports to the EU are mostly machinery, transport equipment
and engineering goods. (Statistics: European Commission,
Directorate General for Trade)
The Economist Intelligence Unit (EIU) expects an annual average
growth rate in real GDP to be around 5 % in 2017-18. The OECD
forecasts the GDP growth to pick up to around 3.25 % in 2017 and
3.75 % in 2018, driven mainly by recovering household consumption
and gradual increases in exports. Monetary policy played a
vital role in controlling and bringing down the inflation over recent
years. The rate of inflation in Turkey has stayed under 10 % since
2004 and year-end inflation was capped as 6.2 % in 2012. EIU forecasts
that the average inflation rate will further ease to 4 % by 2018.
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, exceeding the growth levels
of the GDP and reached TL 220 billion in 2012. Turkey’s increasing
level of disposable income and the high disposable income levels of
its export partners – mostly EU countries, provide a much necessary
boost to the domestic consumption as well as exports.
Author: Sushen Doshi, International Correspondent for World of Industries
WORLD OF INDUSTRIES – MOTION, DRIVE & AUTOMATION 1/2017