Turkey Country Risk Report

Published 23 June 2015 | Quarterly

  • 58 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,195.00
Turkey Country Risk Report

Core Views

  • Although we view positively Turkey's long-term growth outlook, we expect slower, more balanced growth in the next decade relative to the previous one on the back of less abundant foreign capital inflows and slower domestic credit growth.

  • Political uncertainty will be elevated following June 2015 general elections, weighing on business and consumer confidence. The ruling Justice and Development Party (AKP) has lost its single party majority for the first time in 13 years, and it is unclear whether a viable coalition can emerge, making fresh elections a distinct possibility in the coming quarters.

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

  • The AKP will see to maintain a relatively conservative fiscal policy with healthy budget and debt dynamics, although coalition formation could entail a commitment to higher fiscal expenditures.

  • 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 now forecast real GDP growth of 2.8% and 3.5% in 2015 and 2016 respectively, from 3.5% and 3.8% in our last quarterly update.

Key Risks To Outlook

  • The major risk to Turkey's macroeconomic trajectory stems from its external financing requirement. Turkey's large current account deficit and dearth of foreign direct investment inflows...

Table of Contents

Executive Summary
5
Core Views
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
Erdogan-s Hold On Power In Doubt Ahead Of Elections
8
Table: Politica l Over vie w
8
Long-Term Political Outlook
11
Structural Changes To Continue
11
Chapter 2: Economic Outlook
15
SWOT Analysis
15
BMI Economic Risk Index
15
Economic Activity
16
Cheaper Oil, ECB QE Boost Macro Outlook
16
Table: Economic Acti vit y
16
Balance Of Payments
19
Cheaper Oil Won-t Fix External Imbalances
19
Table: Curre nt Acc ount
19
Monetary Policy
21
Central Bank Easing Raises Risk Profile
21
Table: Monetar y Polic y
22
FX Forecast
23
TRY: Dovish Central Bank Accelerating Depreciation
23
Table: Curre ncy Forecast
23
Fiscal Policy
25
Strong Fiscal Profile Masking Risks
25
Table: Fisca l Polic y
25
Regional Article
27
Emerging Europe Relatively Well Insulated From Stronger Dollar
27
Table: Exter nal Financi ng Require ments & Reser ve Buffers
27
Table: Credit , Debt & Li quidit y
28
Chapter 3: 10-Year Forecast
31
The Turkish Economy To 2024
31
Convergence To Remain In Play
31
Table: Long-Ter m Macr oec onomic Forecasts
31
Chapter 4: Operational Risk
33
SWOT Analysis
33
Operational Risk Index
33
Operational Risk
34
Table: Operati onal Risk
34
Availability Of Labour
35
TABLE: Emergi ng Eur ope - Avai labi lit y of Lab our Risk
36
TABLE: Lab our Force Employment By Sect or (-000)
37
TABLE: Top Ten Source Countries For Migra nt Workers
38
Crime Risk
40
TABLE: Emergi ng Eur ope - Cri me Risks
41
TABLE: Cri me Statistics
42
Chapter 5: Key Sectors
45
Automotives
45
TABLE: Autos Total Market - Historical Data And Forecasts
45
Food & Drink
48
TABLE: Food Consumption Indicators - Historical Data & Forecasts
50
Other Key Sectors
55
TABLE: Oil and Gas Sector Key Indicators
55
TABLE: Pharma Sector Key Indicators
55
TABLE: Defence and Security Sector Key Indicators
55
TABLE: Telecoms Sector Key Indicat ors
56
TABLE: Infrastructure Sector Key Indicators
56
TABLE: Freight Key Indicators
56
Chapter 6: BMI Global Macro Outlook
57
Global Outlook
57
Deflationary Pressure
57
Table: Global Assumptions
57
Table: Developed States , Real GDP Growth, %
58
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
58
Table: Emerging Markets , Rea l GDP Growth , %
59

The Turkey Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Turkey. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Turkey's economic, political and financial prospects through end-2019, just published by award-winning forecasters, BMI  Research.

Key Uses

  • Forecast the pace and stability of Turkey's economic and industry growth through end-2019.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Turkey's country risks against regional peers using BMI's country comparative Risk Index system.
  • Evaluate external threats to doing business in Turkey, including currency volatility, the commodity price boom and protectionist policies.

The Turkey Country Risk Report by BMI  Research includes four major sections: Economic Outlook, Political Outlook, Operational Risk and Key Sector Outlook.

Economic Outlook:

How will the Turkey' economic policy-making and performance impact on corporate profitability over 2015-2019?

BMI provides our fully independent 5-year forecasts for Turkey through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Turkey Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector obligations).
  • Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Turkey and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Turkey, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Turkey over the next 5-years?

BMI's Turkey country Risk Index evaluates the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Turkey Market - Political Strengths, Weaknesses, Opportunities and Threats facing Turkey.
  • Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for Turkey's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
  • Long-Term Political Outlook BMI examines the structural risks to the stability of Turkey’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.

Key Benefits

  • Benchmark Turkey's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Operational Risk

What are the current operational risks and difficulties associated with doing business in Turkey?

The Operational Risk section gives an evaluation of current risks and difficulties associated with operating in the market. It also provides a brief overview of the regional Operational Risk Index which benchmarks Turkey against its neighbours.

Operational Risk Contents

The chapter provides a summary of the main threats in the country, within:

  • Labour Market Risk (Education; Availability of Labour; and Labour Costs)
  • Logistics Risk (Market Size and Utilities; Quality and Extent of the Transport Governance)
  • Trade and Investment Risk (Economic Openness; Government Intervention; and Legal Risks)
  • Crime and Security Risk (Crime; Terrorism; and Interstate Conflict risks).

The report also drills down in greater depth to address key issues in one of the following segments most critical to the market:

  • Transport network, economic openness, cost and availability of labour, crime risks, bureaucratic environment, market size and utilities, and interstate conflict.
  • Assess your company’s exposure to country specific operational and business risks, using BMI’s insight on the current dangers of operating in the market.
  • Evaluate Turkey’s risk profile against its regional peers, helping you understand the market’s strengths and weaknesses in relation to other countries.

Key Sector Outlook*

Which industry sectors in Turkey will grow fastest, and where are the major investment opportunities in the market?

BMI identifies investment opportunities in Turkey's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry, including recent sector developments and major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2015-2019, using BMI's proprietary industry modelling technique, which incorporates key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across and within each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

*Not all Country Reports contain the Key Sector Outlook chapter. Please enquire above for more information.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express