Turkey Country Risk Report

Providing comprehensive data and in-depth analysis of political, financial and economic risk.

Report includes: BMI's Core Views, 10-year Forecasts, BMI's Economic Risk Index, Political Stability and Risk Index, Long-term Political Outlook, Operational Risk Index, SWOT Analysis and Structural Economic Sections

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  • Understand and measure the political, business environment and operational risks to your company
  • Gain insight on emerging trends that could support, strengthen or disrupt your activities in the market
  • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
  • Get the long-term political outlook and explore possible scenarios for change
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Turkey Country Risk Report
Product Price
$1,195.00

Core Views

  • Turkish President Recep Tayyip Erdogan will tighten his grip on power in the near term, following the failed coup on July 15-16. However, this will raise long-term political risks in the country, and further strain relations with the West.

  • Turkey will operate under a de-facto executive presidential system under Erdogan, with negative implications for institutional quality and government checks and balances.

  • Turkey faces a challenging foreign policy environment amidst heightened regional tensions and rising domestic security risks as the government attempts to cement its role as an economic and political power in the region.

  • A collapse of the government's ceasefire with the Kurdish separatist PKK is a major step back for the country, weighing on growth potential.

  • Relative to the past decade, we expect slower, more balanced growth in the next decade on the back of less abundant foreign capital inflows and slower domestic credit growth.

  • While the government's debt load is low by regional standards, the private sector's rampant external borrowing in previous years has greatly increased macroeconomic risks.

  • Despite cheaper oil, Turkey's current account deficit will remain large and a major macroeconomic vulnerability. Turkey will remain reliant on short-term foreign capital inflows to cover the sizeable current account shortfall, leaving it prone to tightening global liquidity and shifts in international risk sentiment.

  • A dovish central bank will keep inflation above target and ensure a volatile growth trajectory.

Major Forecast Changes

  • We have revised down our 2017 real GDP growth forecast from 3.3% to 3.0%.

Key Risks

  • The major risk to Turkey's macroeconomic trajectory in the coming years stems from its large external financing requirement. Turkey's large current account deficit and dearth of foreign direct investment inflows leaves the country vulnerable to external shocks and a major outflow of foreign capital, which becomes more likely as the US Federal Reserve commences a tightening cycle. As such, we believe risks to growth are weighted primarily to the downside.

  • Geopolitical conflict and rising incidence of terrorist attacks within Turkish borders have weighed on external trade and tourism inflows, and may escalate in the coming year, dampening further the growth outlook.

Macroeconomic Forecasts (Turkey 2014-2017)
Indicator 2014 2015 2016f 2017f
National Sources/BMI
Real GDP growth, % y-o-y 3.0 4.0 3.0 3.0
Nominal GDP, USDbn 799.1 717.3 732.4 748.3
Consumer price inflation, % y-o-y, eop 8.2 8.8 8.0 7.3
Exchange rate TRY/USD, eop 2.30 2.90 3.04 3.25
Budget balance, % of GDP -1.3 -1.2 -2.0 -1.9
Current account balance, % of GDP -5.5 -4.5 -4.5 -4.8
Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks
5
Chapter 1: Economic Outlook
7
SWOT Analysis
7
BMI Economic Risk Index
7
Economic Growth Outlook
8
Resilient Growth, But Fragile Foundations
8
GDP By Expenditure Outlook
10
TABLE: GDP GROWTH FORECASTS
10
TABLE: PRIVATE CONSUMPTION FORECASTS
10
TABLE: GOVERNMENT CONSUMPTION FORECASTS
11
TABLE: FIXED INVESTMENT FORECASTS
11
TABLE: NET EXPORTS FORECASTS
11
External Trade And Investment Outlook
12
External Account Dynamics Precarious Despite Rebalancing
12
Outlook On External Position
13
TABLE: TOP 5 GOODS EXPORTS & IMPORTS IN 2015
13
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
14
Fiscal Policy And Public Debt Outlook
15
Sovereign Risk Rising Despite Fiscal Prudence
15
Structural Fiscal Position
16
TABLE: MAIN REVENUE & EXPENDITURE CATEGORIES
17
Monetary Policy
18
New CBRT Governor Heralds Even More Dovish Policy
18
Monetary Policy Framework
20
Currency Forecast
21
TRY: Low Real Rates To Underpin Short And Long-Term Depreciation
21
TABLE: BMI CURRENCY FORECAST
21
Chapter 2: 10-Year Forecast
23
The Turkish Economy To 2025
23
Shine Coming Off Growth Story
23
TABLE: LONG-TERM MACROECONOMIC FORECASTS
23
Chapter 3: Political Outlook
27
SWOT Analysis
27
BMI Political Risk Index
27
Domestic Politics
28
Davutoglu Resignation: Political And Economic Implications
28
TABLE: POLITICAL OVERVIEW
28
Long-Term Political Outlook
30
Structural Changes To Continue
30
Chapter 4: Operational Risk
33
SWOT Analysis
33
Operational Risk Index
33
Operational Risk
34
TABLE: OPERATIONAL RISK
34
Economic Openness
35
TABLE: FREE TRADE AGREEMENTS
36
TABLE: TOP 5 IMPORT PARTNERS & PRODUCT IMPORTS, 2010-2014, USDMN
37
TABLE: FREE TRADE ZONES AND INVESTMENT INCENTIVES
38
Availability Of Labour
41
TABLE: EMERGING EUROPE - AVAILABILITY OF LABOUR RISK
42
TABLE: LABOUR FORCE EMPLOYMENT BY SECTOR ('000), 2009-2013
43
TABLE: TOP 10 SOURCE COUNTRIES FOR MIGRANT WORKERS
44
Chapter 5: BMI Global Macro Outlook
47
Global Macro Outlook
47
Summer Of Risk
47
TABLE: GLOBAL ASSUMPTIONS
47
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
48
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
49
TABLE: MACROECONOMIC DATA & FORECASTS
51

Assess your risk exposure in Turkey with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in Turkey with confidence.

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