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Reports

The Economy in Turkey 2018

The Turkish economy grew at a rate of 3.2% in 2016, largely due to the attempted coup and terror attacks. The outlook was negative in the beginning of 2017. Expectations for growth were in the range of 2.5-3% and the Turkish lira was losing value against the dollar. The early retreat of risk perceptions in tight market conditions supported growth, as did measures taken by the government to increase domestic demand. In the first 9 months the economy grew at a rate of 7.4%. However, this growth occurred alongside an increase in financial vulnerabilities. Inflation, foreign debt, loan-to-deposit ratios and budget deficits increased. In the first section we briefly analyze the economy in 2017 and in the second we give our expectations and forecasts for 2018. We estimate that the Turkish economy grew at a rate of 7% in 2017. In the first three quarters, the largest contributor to the 7.4% rate of growth came from consumption expenditures, at 3.8% percentage points. While the contribution from investment was 2.3 percentage points, contribution from net exports was 1.5 percentage points. Public consumption only contributed 0.4 percentage points. Although the growth in investment, which had long been viewed as weak, is notable in the composition of growth, it is not possible to confirm the source of growth since the public and private sectors cannot be differentiated in the data. After recording weak investments in the first two quarters, we record an increase in the third quarter and a return to growth in machinery and equipment investments, which had declined in the last four quarters. Download the full report: The Economy in Turkey in 2018

The Economy in Turkey in 2017

2016 was a difficult year for Turkey. It was a year in which we hoped that we could focus on economic reforms following the November 2015 elections, but instead the agenda was dominated by political developments, including the resignation of the government, an attempted coup, and a proposal to amend the constitution. Furthermore, the continuation of increasingly violent terrorist attacks, the initiation of cross-border military operations in Syria, and domestic repercussions have placed security at the top of the national agenda. Despite these conditions, the Turkish economy had a relatively good start to the year, growing by 4.5% in the first half of 2016. However, the economy contracted by 1.8% in the third quarter. The growth rate was at 2.2% in the first three quarters. As in previous years, domestic demand continues to fuel growth, while the share of government spending has gradually increased. In fact, the government’s consumption expenditures increased 24% in the third quarter, contributing to a 2.8 percentage point increase in growth. Without this contribution, contraction in the third quarter would have been much larger. Download the full report: The Economy in Turkey in 2017

A New Era for the Customs Union and the Business World

TÜSİAD has published a report that analyzes the effects of deepening and modernizing the Customs Union between Turkey and the European Union. The report, entitled, “A New Era for the Customs Union and the Business World,” is a detailed study of the Customs Union, in the context of Turkey’s European Union membership and its participation in TTIP. Expanding and updating the Customs Union, in order to remove asymmetries and increase cooperation mechanisms between Turkey and the European Union, is critical for Turkey’s economy. The report was presented on Tuesday, October 20, 2015 in Istanbul. The President of the Board of Directors of TÜSİAD Cansen Başaran-Symes and United Kingdom Consul General in Istanbul Leigh Turner delivered opening remarks. In her speech, President Başaran-Symes emphasized that “TTIP must be designed with an ‘open architecture’ structure, which could include third countries after the US and EU reach an agreement.” Outlining Turkey’s common values with the EU and the transatlantic community, she continued, “Turkey’s EU membership process is not just about technical criteria and economics but also about reaching the best partnership possible on questions of democratic political values. Turkey’s inclusion in the EU is a process of integration with the transatlantic world’s liberal values.” The authors, Istanbul Economics Consultancy Founding Partner Sinan Ülgen and Istanbul Economics Consultancy Senior Advisor Pelin Yenigün-Dilek presented the report, which was followed by a panel discussion on “EU-Turkey and a Deeper Customs Union: Towards More Advanced Integration in the Context of Full Membership.” The report was funded by the United Kingdom Foreign and Commonwealth Office – Prosperity Fund.   The Executive Summary in English can be found here. Full text of the report in Turkish: “A New Era for the Customs Union and the Business World”  

Ties That Bind: Turkey, TTIP and Transatlantic Partnership

by Baris Ornarli & Audrey Stevens Late last month, EU Trade Commissioner Cecilia Malmström met with U.S. Trade Representative Michael Froman for nearly five hours in an effort to provide momentum to the Transatlantic Trade and Investment Partnership (TTIP) negotiations. Negotiations are progressing slowly, however both sides are reportedly looking to accelerate the process in order to finalize TTIP before President Barack Obama leaves office in January 2017. During this critical phase of negotiations, it is important to reiterate the true potential of TTIP and lay the ground work for its eventual expansion. It is therefore important to recognize Turkey, among other third countries, as an indispensable part of an effective transatlantic economic area.

Business Priorities for Turkey’s G20 Presidency in 2015

Turkey assumes the G20 Presidency in 2015 and will chair and host the B20. In that context, the Turkish Industry and Business Association (TUSIAD) initiated a global study to define the private sector’s priorities for the recommendations that will be produced during Turkey’s Presidency, with special focus on the increasing role of emerging markets and G20 in the world economy. A survey was conducted with business leaders of six G20 countries: Brazil, France, India, United Kingdom, United States and Turkey. The results of the survey are analyzed in light of former G20-B20 outputs, as well as the Turkish government’s priorities for 2015. The survey highlights 9 main priorities, of which respondents rated promoting sustainable and green growth, developing human capital and promoting employment, and improving anti-corruption efforts among the highest. The data is further analyzed by developed and emerging markets in order to identify more targeted approaches to differing priorities. A separate analysis of specific policies identifies a major difference between emerging and developed markets, where emerging markets emphasize governance and control, and developed markets value entrepreneurship and innovation. Following the conclusions drawn from the study, a list of business policy proposals has been created to recommend for inclusion on the G20 agenda during Turkey’s Presidency. Read the full executive summary here. See the full report here.