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Türkiye

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Economic and political overview

Economic Overview

Türkiye's economy stands as one of the world’s largest emerging markets, powered by a diversified industrial base and a dynamic manufacturing sector that bridges Europe and Asia. Bolstered by robust private sector activity and ongoing structural reforms, Türkiye continues to wield significant economic influence both regionally and globally. Following a 5.1% increase in 2023, economic growth is expected to slow from 3% in 2024 to 2.6% in 2025, as necessary macroeconomic stabilisation policies dampen domestic demand (IMF). Tighter financial conditions and ongoing fiscal consolidation will restrict household consumption. Investment and government consumption will also decelerate as the post-earthquake reconstruction effects fade. However, exports are projected to rise due to improvements in the external environment and a continued recovery in international tourism. GDP growth is expected to rebound to 3.2% in 2026 as the impact of stabilisation policies diminishes.

Concerning public finances, Türkiye's economy is projected to experience a gradual reduction in the central government deficit, decreasing from an estimated 4.8% of GDP in 2024 to 3% by 2026. This improvement is anticipated to result from decreased earthquake-related expenditures, enhanced fiscal discipline, a gradual reduction in electricity and gas subsidies, and measures aimed at improving tax revenue collection and reducing informality. Fitch Ratings reports that general government debt fell to 25.2% of GDP by the end-2024 and is expected to average 26.3%, driven by high nominal GDP growth, the real appreciation of the lira, and low primary deficits. Interest payments-to-revenue are forecast to rise, reaching 10.9% in 2025, while the share of foreign-currency-denominated debt decreased to 56.1% in 2024 from 64.2% at the end of 2023, and 55.7% of domestic debt is still subject to interest rate re-fixing within 12 months. Average annual inflation is expected to significantly decline to 32.8% in 2025, down from 60.2% in 2024. However, with inflation still high, persistent expectations, and volatile market sentiment, any rapid easing of monetary policy or deviation from the current policy could trigger renewed inflationary pressures and increase macro-financial stability and balance of payments risks.

According to IMF estimates, employment partially recovered along with the rebound in economic activity, hence the unemployment rate decreased to 9.3% in 2024, its lowest level in nearly a decade. However, a significant underlying market slack persists, as evidenced by consistently high levels of labour underutilization. Combined with the delayed effects of reduced economic activity, this is expected to hinder job creation and push unemployment up to 9.6% in 2025. Wage inequality and the size of the informal sector remain long-standing problems. In 2024, the IMF estimated the country’s GDP per capita (PPP) at USD 41,914, 35.2% below the EU average.

 
Main Indicators 2023 (E)2024 (E)2025 (E)2026 (E)2027 (E)
GDP (billions USD) 1,129.971,344.321,455.411,477.341,565.51
GDP (Constant Prices, Annual % Change) 5.13.02.63.23.4
GDP per Capita (USD) 13,23615,66616,87717,04917,983
General Government Balance (in % of GDP) -2.3-3.3-2.9-2.4-2.7
General Government Gross Debt (in % of GDP) 29.325.226.026.026.0
Inflation Rate (%) 53.960.933.019.216.0
Unemployment Rate (% of the Labour Force) 9.49.39.99.69.5
Current Account (billions USD) -45.01-29.05-30.16-29.68-29.50
Current Account (in % of GDP) -4.0-2.2-2.1-2.0-1.9

Source: IMF – World Economic Outlook Database , October 2021

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

The agricultural sector constitutes 6.2% of Türkiye’s GDP. Despite employing 15% of the active population, the sector continues to suffer from low productivity due to reliance on small farms. Approximately 11% of Türkiye’s territory is used as agricultural land. Wheat is the country’s main crop, though Türkiye is the world’s third-largest exporter of tobacco and the largest producer of hazelnuts (nearly 70% of global production). Türkiye continues to be a net exporter of agricultural products, but livestock imports are growing exponentially to compensate for the shrinking animal breeding sector. Mineral resources are abundant but under-exploited. According to the latest estimates from Turkstat, in 2024, the production of cereals and other field crops (excluding fodder crops) dropped by 5.0%, while vegetables rose by 5.6%, and fruits, beverages, and spices increased by 2.1% compared to the previous year. Production quantities for 2024 were approximately 75.5 million tonnes for cereals and other crops, 33.6 million tonnes for vegetables, and 28 million tonnes for fruits, beverages, and spices.

The secondary sector accounts for 28.4% of GDP and employs 278% of the workforce. Manufacturing is the main industrial activity of the country, accounting for 20% of GDP (World Bank). Car manufacturing and textile spearhead the Turkish industry, and other important segments are food products, basic metals and fabricated metal products, plastic products, chemicals, and electrical equipment. Türkiye is among the largest textile exporters in the world. The iron and steel sector in Türkiye is of great importance for the general performance of the manufacturing industry due to its increasing production capacity, export potential and the inputs it provides to other sectors. Industrial production grew 7% year-on-year in December and rose 5% month-on-month, according to official data. This was the strongest expansion since February last year when output surged by over 11%.

The services sector accounts for 54.1% of GDP, employing 58% of the country’s workforce (World Bank, latest data available). Tourism represents around 12% of GDP as well as 10.2% of employment and is a major source of foreign currency for the nation. Tourism revenue in Türkiye rose by 8.3% in 2024, reaching a record USD 61.1 billion, according to data from Turkstat. As per the Turkish banking sector, it is comprised of 34 deposit banks (of which three are state-owned), 20 development and investment banks, 3 state-owned deposit banks, 9 private deposit banks, and 9 participation banks (European Banking Federation).

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 14.6 27.6 57.8
Value Added (in % of GDP) 6.2 28.4 54.1
Value Added (Annual % Change) 0.2 2.5 5.9

Source: World Bank - Latest available data.

 
Monetary Indicators 20162017201820192020
Turkish Lira (TRY) - Average Annual Exchange Rate For 1 USD 3.023.654.835.707.01

Source: World Bank - Latest available data.

 

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Foreign Trade

Türkiye’s economy is open to foreign trade, which represents 66% of its GDP (World Bank, latest data available). Automobiles (12.1%% of total exports including passenger cars, transport vehicles and accessories for vehicles), machinery (9.9%), mineral fuels and oils (6.4%), and electrical machinery (6%) were the top exports in 2023, with precious stones and metals also being pivotal (5.3%). The main product categories imported were mineral fuels and oils (19.1%), machinery (11.3%), precious stones and metals (9.4%), and vehicles (8.9% - data Turkstat).

Germany (8.2% of all exports), the U.S. (5.8%), Iraq (5%), the United Kingdom (4.9%), and Italy (4.8%) were among the top destinations for Turkish exports in 2023. Russia (12.6%), China (12.4%), and Germany (7.9%) were the main suppliers of goods, followed by Switzerland (5.5%) and the United States (4.4% - data Turksta). Türkiye has 23 active free trade agreements (FTAs), including its very first trade deal with the European Economic Area in 1991 and the most recent one with the United Kingdom. The FTAs signed with Lebanon, Qatar, Sudan and Ukraine are under ratification process. At the same time, Türkiye has pursued FTA negotiations with Japan, Thailand and Indonesia and will start renegotiating the terms of its existing agreements with Georgia, Malaysia and Moldova.

Turkish trade structure has been characterised by a wide deficit, mainly due to energy imports. Also, as most of its exports are tied to imports of intermediate, semi-finished or raw products, the evolution of the trade balance has been traditionally linked to economic growth and the lira's value against the U.S. dollar. In 2023, Türkiye's imports of goods totalled USD 361.7 billion, whereas the total value of its exported goods reached USD 255.7 billion (-0.5% and +0.6% year-on-year, respectively – data WTO). According to WTO, exports of services in 2023 were higher than imports, at USD 101.2 billion and USD 49 billion, respectively. Overall, the trade balance was negative by 2.4% of GDP (it stood at -2.4% one year earlier - World Bank). According to preliminary figures by Turkstat, from January to December 2024, exports totalled USD 261.855 billion, marking a 2.4% increase, while imports reached USD 344.020 billion, showing a 5.0% decrease compared to the same period in 2023. In the same period, intermediate goods accounted for 69.3%, capital goods for 14.7%, and consumption goods for 15.8% of total imports, while the ratios of manufacturing industries products, agriculture, forestry and fishing, and mining and quarrying in total exports were 94.1%, 3.6%, and 1.7%, respectively.

 
Foreign Trade Values 20192020202120222023
Imports of Goods (million USD) 210,345219,517271,426363,711361,774
Exports of Goods (million USD) 180,833169,638225,214254,170255,777
Imports of Services (million USD) 28,65723,88429,59640,41349,075
Exports of Services (million USD) 67,21738,24361,40890,285101,216

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20192020202120222023
Foreign Trade (in % of GDP) 63.261.371.181.266.3
Trade Balance (million USD) -16,781-37,874-29,321-89,586-86,344
Trade Balance (Including Service) (million USD) 25,986-22,6923,299-37,490-29,641
Imports of Goods and Services (Annual % Change) -5.06.81.78.611.8
Exports of Goods and Services (Annual % Change) 5.3-14.625.19.9-2.8
Imports of Goods and Services (in % of GDP) 30.132.235.342.634.4
Exports of Goods and Services (in % of GDP) 33.129.135.738.631.9

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20242025 (e)2026 (e)2027 (e)2028 (e)
Volume of exports of goods and services (Annual % change) 3.74.32.21.73.1
Volume of imports of goods and services (Annual % change) 0.76.33.02.34.0

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
Turkey is a member of the following international economic organisations: G-20, WTO, IMF, Pacific Alliance (observer), OECD, ICC, among others. For the full list of economic and other international organisations in which participates Turkey click here. International organisation membership of Turkey is also outlined here.
Free Trade Agreements
The complete and up-to-date list of Free Trade Agreements signed by Turkey can be consulted here.
 

Main Partner Countries

Main Customers
(% of Exports)		 2023
Germany 8.2%
United States 5.8%
United Kingdom 4.9%
Italy 4.8%
France 4.0%
See More Countries 72.2%
Main Suppliers
(% of Imports)		 2023
China 12.4%
Germany 7.9%
Switzerland 5.5%
United States 4.4%
Italy 4.1%
See More Countries 65.6%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
President and head of government: Recep Tayyip ERDOGAN (since 28 August 2014)
Next Election Dates
Presidential: 2028
Legislative: May 2028
Current Political Context
Turkey held presidential and parliamentary elections on May 14, 2023. The ruling Justice and Development Party (AKP) and its allies won a majority in the parliamentary elections, but President Recep Tayyip Erdoğan (who has been in charge since 2014) fell short of an outright majority in the presidential elections. A second round was held on May 28, which Erdoğan won by a narrow margin.
In local elections which were held in March 2024, the Republican People's Party (CHP) achieved notable victories, winning key municipalities, including Istanbul, where Ekrem İmamoğlu was re-elected as mayor. This outcome was considered a major setback for Erdoğan and the ruling AKP.
Concerning foreign policy, Turkey, the United States, and the European Union remain committed to ongoing diplomatic engagement despite current challenges. The Turkish Foreign Minister's participation in an informal EU Foreign Ministers' meeting in August 2024, following a five-year absence, signalled the possibility of renewed momentum in EU-Turkey relations. In terms of U.S. foreign policy, the Trump administration's approach will play a crucial role in shaping ties with Turkey. Despite differing views on key issues such as the Ukraine-Russia conflict and the war in Israel, stabilizing factors like NATO membership and Turkey's regional influence may foster a more stable relationship. On the other hand, Turkey's talks with BRICS reflected its pursuit of alternatives to the stalled EU accession process: in October 2024, Erdogan attended a BRICS leaders' summit hosted by Russian President Vladimir Putin in Kazan, after Ankara said it had taken formal steps to become a member of the group, and the country was offered partner country status by the organization. The ties with Russia, ranging from energy to the grain corridor, are expected to continue. However, these relations could be strained by Ankara's involvement in the fall of the Assad regime in Syria. In fact, evidence suggests that Turkey played a pivotal role in the operation that ousted the Russia-backed government, likely offering training and material support to key rebel groups, including the Syrian National Army (SNA) and Hayat Tahrir al-Sham (HTS).
Main Political Parties
The main political parties represented in the Turkish parliament are:

- Justice and Development Party (AKP): centre-right, primary leading party, socially conservative
- Republican People’s Party (CHP): centre-left, primary opposition party based on social-republican values
- Labour and Freedom Alliance: left-wing electoral alliance, formed by Peoples' Equality and Democracy Party (DEM), Peoples' Democratic Party (HDP), Workers' Party of Turkey (TİP), Labour Party (EMEP), Labourist Movement Party (EHP), Social Freedom Party (TÖP) and Federation of Socialist Assemblies (SMF)
- New Path (NP): centre-right to right-wing, political alliance between the Felicity Party (SP), Democracy and Progress Party (DEVA) and the Future Party (GP)
- Peoples' Equality and Democracy Party (DEM): pro-Kurdish, left-libertarian, formerly known as Party of the Greens and the Left Future
- Peoples' Democratic Party (HDP): pro-minority, left-wing, socialist and democratic
- Nationalist Movement Party (MHP): nationalist party, allied with the AKP
- The Good Party (IYI): nationalist, conservative, Kemalist
- New Welfare Party (YRP): far-right, conservative, Islamist
- Workers' Party of Turkey (TIP): socialist, left to far-left.

Executive Power
The President of Turkey serves as both the head of state and head of government, elected by direct universal suffrage for a five-year term. The President acts as an arbitrator by promulgating laws and signing decrees, while also appointing the Council of Ministers, judicial authorities, and other governmental bodies. The office of Prime Minister was abolished after the constitutional referendum in April 2017.
Legislative Power
Legislative power in Turkey is unicameral. The Parliament, called the Grand National Assembly of Turkey, has 600 seats and its members are elected by universal suffrage for five years, according to a system of proportional representation.
 

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