Document Sample

Macro Economy

      Turkey is the world's 16th and Europe’s 6th largest economy. Goldman Sachs'
       recent research predicts that Turkey's economy will be the second biggest in Europe,
                      th                                                     th
       after UK, and 9 in the world by 2050. Turkey aims to be the world’s 10 largest
       economy by 2023, on the 100 anniversary of the foundation of the Republic. OECD
       estimates that Turkey will be the third highest growing country after China and
       India by 2017 and will surpass India after 2017 to become number two.

      According to Turkish Statistics Institute, GDP grew by 11.7% and 10.3% in the first and
       second quarters of this year, respectively. With its 10.3% second quarter growth rate,
       Turkey became the fastest growing economy in the G-20 with China, and the third-fastest
       growing economy in the world after Singapore and Thailand for that same period. In
       September 2010 the FTSE Group promoted Turkey from ‘secondary emerging’ status to
       ‘advanced emerging’ status.

      According to the OECD, Turkey is expected to be the fastest growing economy among
       OECD members during 2011-2017, with an annual average rate growth of 6.7%.

      The Economist has recently coined the term ‘CIVETS’ (Columbia, Indonesia, Vietnam,
       Egypt, Turkey and South Africa), to describe six emerging, often overlooked, markets that
       are becoming ever-more attractive to investors. Turkey was commended for its young
       and growing population, diversified economy and low debt levels. It was noted for having
       the highest GDP per capita out of the six countries in the bloc.

      According to the IMF data, Turkey’s Purchasing Power Parity (PPP) adjusted GDP
       for the year 2009 was $880 billion, which rose from $305bn in 2003.

      Turkey is one of the world’s biggest markets with a population of 73 million and a
       labour force of 25 million. 61% of people are under the age of 35 while 43% of people
       are under 24. Turkey has the highest youth population and 4 largest labour force
       compared to EU-27 countries and the world’s 13th largest urban population (about
       50 million). Labour productivity grew at an average rate of 6.1% between 2002 and 2008.

      Istanbul and Ankara are among the biggest cities in the world in terms of GNP.
       (Istanbul is 34th and Ankara 94 ). At $133 billion Istanbul’s GNP surpasses that of
       many countries such as Romania, Ukraine, Croatia and Luxembourg.

      Istanbul is the largest city of Europe with 11 million inhabitants. According to the Forbes
       list of World’s Billionaires 2010, as of late March, Istanbul inhabits 28 billionaires, ranking
       it at number 4 in the world; following Moscow, New York and London. Turkish
       entrepreneurs in Europe run €40 billion worth of business employing 500,000 people.

      Turkey’s regulatory environment has improved in recent years. Starting a business
       takes an average of six days, compared to the world average of 35 days.

      Turkish companies are becoming major players in the global market place.
       Hundreds of thousands of jobs in Europe depend on Turkish business. One in four of
       the largest companies in Middle East and North Africa are Turkish and 65% of
       industrial exports from the MENA region originate from Turkey.

      Turkey’s annual foreign direct investment (FDI) volume was $22bn in 2007, more
       than its total amount between the years 1980 and 2004. FDI inflows to Turkey have
       reached $7.6bn by the end of 2009 due to the global economic recession but are
       expected to continue rising in the following years. Between 2002 and 2007, the majority
       of the FDI was in the transportation and communication sectors ($41.4bn), followed by
       the financial sector ($38bn).

      Two-thirds of Turkey’s overall FDI comes from the EU. Turkey has become an
       investment base for European businesses with increasing integration into the EU’s supply
       and production chain.

      Turkey's export volume was $102bn in 2009. This is more than Turkey’s total export
       volume between 1923 and 1989. The official target is to increase exports to $170bn in
       2015 and $500bn by 2023.

       Turkey was EU's 5th largest export and 7 largest import partner in 2009. Turkey
       and EU exchanged $103bn worth of goods in 2009. In 2009, 46% of Turkey's trade
       transactions by volume were with the EU. Turkey’s leading exports are automotive,
       textile and white goods. 90% of Turkish exports are industrial goods. Turkey’s major
       export partners last year were Germany (9.6%), France (6.1%), UK (5.8%), Italy (5.8%)
       Iraq (5%) while major import partners are Russia (14%), Germany (10%), China (9%),
       USA (6.1%), Italy (5.4%).

      Turkey has been in the customs union with EU-27 countries since 1995 and has
       free trade agreements with 15 other countries, providing free trade opportunity with
       more than 40 countries.

      With the recent diplomatic efforts of the government, the number of countries that
       Turkey has lifted visa requirement with has reached 62 by 2010. Syria, Russia,
       Lebanon, Jordan, Libya, Indonesia, Pakistan, and Serbia are the countries which have
       recently lifted visa requirements for Turkish citizens. This also helped Turkey to increase
       its trade and economic relationship with those countries. Turkey still aims to lift visas with
       EU countries as well as Gulf and North African countries.

      Turkey's net debt-to-GDP ratio is expected to be 42.3% by the end of 2010, which is
       well below the Maastricht Criterion of 60%.

      In 2010, S&P, Moody’s and Fitch – the top international credit rating agencies -
       upgraded Turkey’s credit rating. Turkey was one of the few countries whose credit
       rating was upgraded by two notches by Fitch during the global financial crisis.

      Turkey’s financials structure ensured its resilience to the global financial crisis and its
       ongoing recovery. The Economist noted that not a single Turkish bank collapsed and this
       is partly due to the fact that, unlike many Western banks, they have few toxic assets and
       limited mortgage exposure. The recovery in Turkey was the strongest in the OECD
       area as measured by the cumulative increase in GDP from the trough until the first
       quarter of 2010 by over 10%.

Industrial Sectors in Turkey

      Turkey is playing an increasingly important role in the transit of oil and gas
       supplies. Sources include Russia, the Caspian region, and the Middle East routed
       westward to Europe. As an energy transit country, Turkey currently has the capacity to
       transport 121 million tons of oil to the world markets per year. Once the ongoing projects
       are completed, the annual transit capacity will increase to 221 million tons of oil and 43
    billion m³ of natural gas. Turkey is a partner of the Nabucco Pipeline project which aims
    to transit gas from the Caspian and the Middle East to Europe (Austria).

   The renewable energy sector has been injected with billions of dollars in recent years by
    leading Turkish banks and is expected to grow further in the coming years. Turkey takes
    the lead among other European countries with its wind energy technical potential,
    which is estimated to be around 10,000 megawatts. With regards to geothermal energy
                             th                 rd
    potential, Turkey ranks 7 in the world and 3 in Europe.

   In September 2010, Turkey’s power grid was official connected to the EU energy
    system through Bulgarian and Greek grids. The Turkish Electricity Transmission
    Company (TEIAS) will now be able to buy and sell power in the European electricity
    market and this connection will also strengthen the reliability and availability of energy
    throughout Europe.

   Turkey's tourism sector is one of the biggest in the world. 27 million tourists
    visited Turkey in 2009 and tourism revenues reached $21.2bn. According to
    PricewaterhouseCoopers, Turkey’s tourism sector will expand by 12.1% between
    2010 and 2013.

   Turkey is the seventh most visited country in the world and aims to be one of the
    five most visited countries by 2023. Istanbul is the 3rd mostly visited city of Europe,
    after London and Paris. Istanbul is also currently the European Cultural Capital of 2010.
    Turkey has 11 out of the world’s 100 best hotels.

   The increasing number of tourists also suggests that demand for holiday homes could
    grow. Turkish General Directorate of Land Registry show that 32,000 Britons now
    own property in Turkey.

   Turkey is the 6th largest clothing manufacturer in the world and the 2nd largest
    supplier to the EU. The production value of Turkish textiles and clothing industry is
    $30bn, $23bn of which is exported. Turkish companies manufacture the garments of
    many world renowned retailers, including Adidas, Tommy Hilfiger, Gap, Marks &
    Spencer, Next, Burberry, Banana Republic, H&M and Diesel. Turkey is also the second
    largest producer of organic cotton.

   Turkey's construction/contracting industry is the 3rd largest industry in the world,
    after the US and China. Turkish contractors are among the biggest players in the Middle
    East, North Africa and the Former Soviet Union with 15 fold increase in business volume
    between 2002 and 2008. In 2008, Turkish contractors won $24bn worth business abroad
    and 31 Turkish companies are in world's top 225. Turkey also has the second highest
    building in Europe, the 300-meter Sapphire building.

   According to the Jones Lang LaSalle’s Global Real Estate Transparency Index,
    Turkey was a star performer in 2009-2010, showing the greatest improvement in
    transparency since 2008. Turkey currently ranks at 36 place among 81 countries
    covered by the index, whereas the country’s ranking was 67 in 2008. The recently
    published Global Commercial Real Estate Transparency Index (2010) also shows that
    since the two years that the last index was published, Turkey improved more than any
    other 81 markets in the sample.

                             th                               nd
    Turkey is the world’s 6 biggest cement producer, 2             flat glass manufacturer and
    1 boron mineral producer.
       Turkey is the 2 jewellery exporter in the world and has a capacity to produce 400
       tons of gold and 200 tons of silver annually.

                             rd                               rd                  th
       Turkey is Europe’s 3 ceramic tile manufacturer, 3 big yacht and 8 ship builder.
       The country also boasts the position of being the 4 largest telecom market in

      Turkey is among the top refrigerator and white goods producers in the world and is
       also Europe’s 6 refrigerator manufacturer. In the UK, Europe's leading white goods
       market, Turkish brand Beko is the market leader in cooling and cookers segments the
       2nd in the white goods market.

                                          th                 rd
       Turkey is currently the World’s 8 and Europe’s 3 largest iron and steel producer
       and aims to among the top 8 countries worldwide in the next 15 years.

       Turkey is the leading passenger bus manufacturer, 2 largest light commercial
       vehicle manufacturer and the 4 automotive and parts manufacturer of Europe.
       Today, there are 15 companies, including foreign investors such as Fiat, Honda,
       Hyundai, Renault and Toyota, Mercedes-Benz and M.A.N, manufacturing various types
       of vehicles in Turkey.

      Turkey is the number one TV manufacturer in Europe. Turkish company Vestel is the
       third largest LCD TV supplier of Europe after Samsung and LG with a 15% market share.

      There are 35 million internet users in Turkey (representing 50% of the population)
       as of 2010. Turkey’s mobile market is strong, with penetration in 2008 reaching 92.3%
       and expected to be 97.3% by the end of 2010. In Turkey, 60% of internet users connect
       to internet every day while the average is 50% in Europe.

      Turkey is the third country in Europe with the most cell phone usage. In the first
       quarter of 2010, Turkey's monthly mobile communication use was 195.7 minutes per
       subscriber. Moreover, the number of 3G subscribers reached almost 8.7 million by the
       end of March. Turkish-owned Turkcell is the third biggest operator in Europe.

      Turkish retail sector is the 7th largest in Europe and the 10th largest in the world.
       Retail sector is the 4th largest sector in Turkey (following energy, education and
       healthcare), with an estimated size of $199 billion as of the end of 2009. According to a
       joint report by PricewaterhouseCoopers (PwC) and Turkey’s Shopping Malls and
       Retailers Association (AMPD), the organised retail sector is expecting $5bn of
       investments and approximately 135,000 new jobs until 2012.

       Turkey has the second largest army in NATO, after USA and is the 9 largest importer
       of defence equipment with a $4bn budget.

      Turkey has the richest land in biodiversity in Europe.

      There are 23,500 foreign enterprises active in Turkey.

      UK was the second biggest export partner of Turkey for the first 8 month of 2010.

Major UK investments in Turkey
   While the British FDI into Turkey was $141million in 2003, this value has risen to $2.3bn
    in 2009. The number of British capital firms in Turkey was 536 in 2004, while there are
    now 2,212 British capital firms operating in Turkey as of March 2010.

   Aviva and Ak Insurance merged in June 2007. The merged company became the
    biggest individual pension and the 3rd largest life insurance company in Turkey.

   Vodafone purchased Turkey’s second biggest GSM player Telsim in 2006 for $ 4.5
    billion. Vodafone invested $ 1.2 billion over two years to extend the Telsim network and
    increase the quality of communication. This is Vodafone’s biggest investment project in
    Europe. Vodafone also recently announced that its acquisition of the Turkish
    telecommunications firm Borusan Telekom has recently been completed.

   Since purchasing Izmir-based supermarket chain Kipa in 2003, Tesco has been
    expanding aggressively in the Turkish market, increasing the number of stores under the
    name of Tesco-Kipa from 5 in 2003 to 107 in 2010. The medium term goal is to become
    one of Turkey’s top three retailers.

   Luxury Retail Brand Harvey Nichols have recently opened its second (and world’s 12th)
    store in Ankara after the first store in Istanbul.

    HSBC purchased Demirbank in 2001, then Turkey’s 6 largest bank. HSBC accounts for
    10% of total consumer credit market and 7% of credit card market in Turkey. HSBC has
    330 branches in Turkey by 2010.

   BP is one of Turkey’s largest foreign investors. The company is active in distributing and
    marketing fuel, oil and lubricants, LPG and the exploration of petroleum and gas. BP is
    also the operator of the $ 4billion Baku-Tblisi-Ceyhan oil pipeline project, which is the
    biggest energy project in the world so far carrying 10 million barrels of oil per year. BP is
    the biggest shareholder in the BTC holding 30% of the company shares. BTC launched
    “Community Investment Programme” and “Environmental Investment Programme” which
    involved a total of $ 12 million funding to mitigate the negative impacts of the construction
    and long term presence of the pipeline.

   British American Tobacco bought Tekel Tobacco, a state owned Tobacco Company, in
    2008 with a bid of $ 1.72bn. BAT’s acquisition increased its share in the Turkish market
    from 7% to 36%, making it the second biggest player in the Turkish tobacco market.

   Shell (Anglo Dutch) is among the major gas producers in Turkey. They recently signed
    an agreement to participate in a major oil pipeline project in Turkey. The Samsun-Ceyhan
    oil pipeline aims to relieve the burden of oil tanker transport on the Turkish Straits
    (Bosphorus). The pipeline is estimated to cost $ 1.5 billion. Shell also holds 2% of
    Turkey’s biggest oil refinery Tupras.

   Unilever (Anglo Dutch) has been active in Turkish market for years. In terms of turnover
    Unilever Turkey is among top 10 Unilever companies in the world (out of 151). The
    company’s 2007 turnover was Euro 1 billion with a growth rate of 20%. Unilever Turkey
    has also become a training centre of global Unilever and a regional headquarters.
    Unilever Turkey is also responsible for the Iranian market.

   Levi's Jeans separated Turkey from the Asian region and made it the hub for 26
    countries, including Russia and Middle Eastern countries. The current manufacture
    centre in Corlu has been transformed into their only research and development centre.
   MNG Airlines purchased Rolls Royce design Trent 700 engines for their 3 new Airbus
    aeroplanes for $180 Million. The maintenance of these engines will be made by the sister
    company MNG Teknik, which will make it the most important Rolls Royce engines
    maintenance centre of the region.

   GlaxoSmithKline is among the most prominent pharmaceutical companies in Turkey
    and currently accounts for 7% of the Turkish pharmaceutical market share.

   Astra Zeneca is also another important player in the Turkish pharmaceutical industry and
    is employing 640 people in 9 different regions of Turkey.

   The Anlgo-Dutch Corus Group, the world’s fifth largest steel producer, has established
    major joint-ventures within Turkey. Corus Yasan is the country’s market leader in
    producing and supplying painted steel products. Corus Celik Ticaret exports Turkish
    steel products and imports steel and has taken infrastructure development projects in

   Three major British companies recently opened offices in Turkey: RMJM, the global
    architecture company, Mott MacDonald, the world's leading consulting group and DLA
    Piper, one of world’s biggest legal consulting companies.

   FG Wilson, Europe’s largest and world’s third-largest producer of generator sets,
    is set to expand into the Turkish market.

   Turkey’s retail sector is also attracting increasing British investment. A number of British
    companies (some with foreign partners) have invested in Turkey. These include Saint
    Martin’s (which bought Cevahir Mall in Istanbul, Europe’s largest shopping mall), Parador
    Properties, Financial Dimensions, King Sturge, Jones Lang LaSalle etc.

                                                                                 October 2010
                                                                             Economic Section

                                             For updates contact: Cigdem Celik or Ipek Ariogul

Shared By: