Economic studies


Population 79.8 million
GDP 10,817 US$
Country risk assessment
Business Climate
Change country
Compare countries
You've already selected this country.
0 country selected
Clear all
Add a country
Add a country
Add a country
Add a country


major macro economic indicators

  2015 2016 2017(f) 2018(f)
GDP growth (%) 6,1 2,9 5,5 4,9
Inflation (yearly average, %) 7,7 7,8 10,9 9,3
Budget balance (% GDP) -1,0 -1,1 -2,0 -1,9
Current account balance (% GDP) -3,7 -3,8 -4,6 -4,3
Public debt (% GDP)* 27,5 28,1 28,5 28,5

*EU-defined general government’s debt stock (f): forecast


  • Demographic vitality
  • Large population with rising middle income class
  • Strategic geographic location
  • Well-developed industrial base
  • High capacity of creating employment


  • Domestic and geopolitical instability
  • High dependence on external borrowing
  • High import reliance of the industry
  • Security risks


Solid growth buoyed by fiscal measures, domestic demand and exports

Turkey is expected to record strong growth rates in 2018 after experiencing several shocks – such as a failed coup attempt, sharp depreciation of the lira, and security issues – in 2016 and 2017. Growth is set to be stimulated by government support, private consumption, investments, and exports. However, rising inflationary pressures, a weaker lira, and tax hikes are likely to weigh on domestic demand, which in turn may impact domestic-driven sectors’ performances. In early 2017, the government decided to increase the size of the credit guarantee fund (CGF) to ease small and medium companies’ access to financing. The size of the fund has been raised to TRY 250 billion (USD 63 billion, nearly 7% of GDP). Rising capacity utilisation and improving business sentiment are expected to sustain private investment, yet the pace of growth may lose some momentum as the impacts of the CGF fade away.

Exports are set to remain strong in 2018 on the back of the steady growth in Western Europe, Turkey’s main trading partner. A continued depreciation of the lira will admittedly help boost exports, but remains the main risk for Turkey’s import-dependent economy in the upcoming period. Non-financial private sector’s short-term foreign currency denominated debt stood at USD 44 billion as of the second quarter of 2017. Any additional weakness of the lira will increase the debt burden and the costs of imported inputs for the manufacturing sector. A likely rate hike process from the central bank to counter the currency weakness and inflationary pressures would, on the other hand, add to borrowing costs. This scenario would deteriorate cash flow management of Turkish companies, who suffer from a structural undercapitalisation.


Twin deficits: a cause for concern

While promoting banks’ lending, the government’s CGF programme pushed the banking sector’s loan to deposit ratio as high as 125% in the second quarter of 2017. This situation increases currency risks and dulls the rebalancing of the current account deficit. The widening of the budget deficit was related to higher interest expenditures, capital transfers, and current transfers. In total, non-interest expenditures rose by 17.8% year-on-year in the first seven months of 2017, while interest expenditures increased by 11.8%. Further widening of the deficit was prevented by a recovery in revenues.

The higher fiscal deficit also raises the treasury’s borrowing requirements. Between January and September 2017, the treasury’s total eurobond issuance reached USD 9.1 billion, although the planned annual amount was only USD 6 billion. Domestic debt roll-over ratio of the treasury rose to 154.6% in September 2017 from 90.6% annually in 2016. Off-balance sheet stimulus measures may represent upside risks to debt levels if they are realized, as the government may need to assume liabilities mostly due to the public guarantees given under the Public Private Partnership (PPP) projects. Although expansionary fiscal policy is likely to be gradually scaled back in 2018, the average fiscal deficits may continue to remain high ahead of the elections in 2019, compared to previous periods. Further deterioration of fiscal dynamics may weigh on investors’ sentiment and interest rates.

The structural lack of savings will likely continue to be the economy’s Achilles heel in 2018. The current account deficit is expected to decrease somewhat on the back of slower GDP growth, but the recent recovery in energy prices will increase the import bill further. Against this backdrop of significant current account deficit, the economy remains dependent on volatile and short-term external financing, and continues to be vulnerable to exchange rates’ volatility and exit strategies of major central banks. Indeed, FDI – still deterred by regional geopolitical tensions – are not significant enough to offset the current account deficit.


Lower political noise, rising geopolitical tensions

Following the April 2017 referendum regarding a vote on constitutional amendments that would transform the country from a parliamentary democracy into a presidential system, political noise has eased in Turkey. Additionally, improving relations with Russia, Iran, and Iraq’s central government have allowed the country to strengthen its regional cooperation and commercial flows. However, the uncertain relationship between Turkey and the European Union, as well as recent tensions with the United States, should be monitored closely, as they may have economic impacts if tensions rise. Turkey has planned three elections for the near future, with the first – local elections – set to take place in March 2019. If domestic political tensions increase ahead of this, then the economy may be negatively impacted, as it would increase risk aversion against Turkish assets. 


Last update : January 2018



Traditional credit payment instruments are still in common use in Turkey’s domestic market, as they not only constitute a means of payment, but also often serve as negotiable instruments.

This is the case for promissory notes, a solution regularly used by smaller and medium-sized companies for commercial transactions. Similarly, post-dated cheques are another commonplace practice, as they serve as both a title of payment and a credit instrument. Cheques circulate in the domestic market as negotiable instruments until their maturity date.

The most recent law concerning cheques, which came into force in December 2009, focuses on the protection of the rights of cheque holders (beneficiaries). The law covers three categories of cheques – cheques for business users, cheques for consumers, and pre-printed bearer cheques – with the aim being to optimise tracking of cheques as a payment instrument and combat the underground economy.

Although banks are now required to exercise greater vigilance with regard to the profiles of their clients, the law also provides for large financial sanctions, which are payable by the drawer of the cheque in cases of non-payment.

An amendment, which came into effect on 15 July 2016, imposes a punitive fine on the person responsible for a “dishonoured transaction”. If the fine is not paid, the punitive measure can be transformed into a prison sentence of up to 1,500 days. In such cases, neither settlement nor prepayment are executed. In addition, the drawer of a dishonoured cheque is subsequently banned from drawing cheques or opening cheque accounts for ten years, by order of the court (an administrative, rather than a penal sanction).

For rapid and secure processing of bank transfers, the SWIFT electronic network is well-established in Turkish banking circles and constitutes the most commonly used instrument for international payments.


Debt Collection

There are three separate procedures in Turkey for pursuing debt payments:

1. Amicable Procedures

2. Debt Execution Procedures (provided by an Administrative Body)

3. Litigation Procedures (examined by the Court)


1. Amicable Procedure

Out of court settlements are always preferable to taking legal action. Amicable procedures, which involve the sending of a formal notice to pay, followed by repeated telephone calls, remain a relatively effective method. On-site visits can also pave the way for restoring communications between suppliers and customers, thereby enhancing the chances of completing successful negotiations. Points of negotiation include the number of instalments, guarantees, collaterals, grace periods and interest. The civil procedure code specifically states that the judge may at any time during legal action encourage the amicable settlement of the dispute, provided that it results from a real desire by the parties to seek an out-of-court settlement via a negotiated transaction.

The “Law on Mediation in Civil Disputes” stipulates that mediation shall be applied only in the resolution of private law conflicts (including those with an international element) arising from acts or transactions of interested parties who have the capacity to settle such conflicts.

The parties involved design their own solutions in an environment conducive to mutual understanding. Mediation relies on a process of communications, via meetings and negotiations. While the parties create their own solution framework, an impartial and independent third party (a mediator) enables them to establish communications, hold meetings and generally develop better understanding of each other.

The parties are free to apply to a mediator at any time, in order to continue, finalise or abandon the process. The parties can also apply to a mediator before filing a lawsuit, or while a lawsuit is pending. The court may also advise and encourage the parties to apply to a mediator.

Depending on the debtor’s solvency, the terms of the transaction can range from payment in full, to repayment by instalments, to a partial payment as final settlement. In the absence of a voluntary settlement, the threat of a bankruptcy petition (iflâs) is a frequently employed tactic to elicit a response from the debtor and prompt them to pay the arrears.


2. Debt Execution Procedure, via an Administrative Body

There are particular advantages for creditors who use negotiable instruments such as bills of exchange, promissory notes and cheques – provided they have been duly established and that any legal action is taken within the legal limitation period. These instruments enable creditors (without obtaining a prior ruling) to directly approach the enforcement office (Icra Dairesi) for serving the debtor with an injunction to pay. They can then, if necessary, proceed with the seizure of the debtor’s assets.

Seizure is a process that begins with filling an order for payment, which is then served to the debtor. If there are no objections to the order, the assets of the debtor are liquidated to cover the claims. If the order is not accepted by the debtor, he has the possibility to request that the creditor proves the claim in court.

The debtor has ten days to settle the arrears in question, or five days to approach the enforcement court and oppose payment on grounds that, for example, the signature on the document is not his own, or that the debt no longer exists. If the opposition is deemed to be abusive, the debtor is liable to large penalties.


3. Litigation Procedure, examined by the Court.

If the pre-legal procedures for the collection of the debt from the partner/supplier fail, a lawsuit can be brought against the debtor before commercial courts. The commercial court (asliye ticaret mahkemeleri), which is a specialised chamber of the court of first instance, is competent to hear commercial disputes and insolvency proceedings. Commercial courts exist in the main Turkish cities.

In cases where the validity of the claim is disputed, the only recourse is to initiate ordinary proceedings, via a summons, to appear in court.

If Turkey has not signed a bilateral treaty or a reciprocity treaty with the plaintiff’s country, the plaintiff is required to put up a surety bond, judicatum solvi, with the competent local court. This amount represents approximately 15% of the claim. The same pertains to Turkish applicants with no permanent residence in Turkey. At the end of the litigation procedure, the security deposit is refunded to the creditor by the court. The reason for the surety bond is to protect the debtor against potential damages by foreign entities during the procedure.

The plaintiff is also obliged to put up one quarter of the court fees, which are proportional to the amount of the claim, at the commencement of the proceedings. In addition, notarised documents must be presented to the court, including the contract signed between the parties (if available) and the invoices due (translated into Turkish by a certified translator, if the documents are drafted in a foreign language).

Claims need be filed with details including the name of the court, the names and addresses of the creditor and the debtor (along with the details of their attorneys or legal representatives), the amount due, the circumstances of the claim, the content of the demand, public taxes and costs, the power of attorney (if necessary) and the signature of the person making the claim.

Ordinary proceedings are organised into three phases. The first involves position statements from each party (a statement of claim and a statement of defence). In the second and lengthier phase, the court investigates the case and examines the relevance of the evidence submitted, to see whether it is conclusive or discretionary evidence. Finally, in the main hearing that constitutes the third phase, the court hears both parties and their lawyers before issuing a ruling.

The new civil procedure code, effective since 1st October 2011, was designed to accelerate and simplify proceedings, in order to combat lengthy lawsuits and reduce the workload for courts. The parties need to submit their defence arguments, counter claims and available evidence at the commencement of the trial. These documents are reviewed by the court during a preliminary hearing, during which the parties will be encouraged to reach a compromise.

The examination and cross examination of the litigants is now conducted by lawyers, in order to discharge judges who previously had a strong tendency to resort to expert opinions to assist them with their judgments. The new code also limits the list of technical and scientific experts that can be registered with the Ministry of Justice.

  • English