Anadolu Ajansı © 2026
by Bahattin Gonultas and Andrew Jay Rosenbaum
ANKARA
Ibrahim Caglar, the head of the Istanbul Chamber of Commerce said that Turkish businesses expanded at reasonably healthy pace in 2014, in spite of geopolitical and economic hurdles.
“The conflict between Ukraine and Russia, tensions in Iraq and Syria, both Turkey’s neighbors, are also affecting economic agenda. Despite these risks, Turkey has reduced its trade deficit. Besides, the similar picture is waiting for Turkey in 2015; the export-oriented manufacturing and diversity in foreign markets will strengthen our hand.”
A look at Turkish mergers and acquisitions (M&A) activity in 2014 confirms Caglar’s observation. M&A targeting Turkish companies was valued at $9.6 billion up to the end of the third quarter of the year, according to statistics from MergerMarket released in September. There were 125 transactions, with eight more deals than in the same period in 2013. Deal value decreased, however, by 28.9 percent. The consumer sector showed a very high level of activity with 31 deals through the third quarter in 2014, exceeding every other annual total on Mergermarket record.
Turkish companies have been energetically engaging in cross-border transaction this year, both inbound, for $39.9 billion and outbound for $71.4 billion. It is the fifth consecutive year that M&A has increased, Mergermarket said.
Economic growth, in terms of GDP, has of course been slow.
Turkey’s growth rate has been between 2.5 to 3 percent in the last few years. Caglar estimates that the economy in 2015 will growth above 4 percent, with exports as the driver.
But current slow growth is a challenge for Turkey. “Unfortunately these figures are well below our potential and our needs,” said Sabanci Holding Chair Güler Sabanci in a statement released to media.
“However, the decline observed in the country’s growth rate is due to the turbulent economic environment in the world, lack of confidence in emerging markets, and lack of domestic investment due to the low national savings rate.” Gulenci warned of an upcoming reduction in foreign investment in emerging markets, as oil exporting countries are suffering from the low oil price, and the U.S. Federal Reserve's tighter money policy is likely to attract funds to that country away from countries like Turkey.
She added that Turkey could escape from "middle income trap" by using its still considerable resources to increase the quality of its education as well as by nurturing innovation and creativity. The "middle income trap" occurs when wages rise in an exporting country to the point that exports are no longer competitive.
Turkey is actively shifting to high value-added exports that can compete around the globe.
Turkey’s exports stood at 151.7 billion in 2013 but the country wants to increase its exports further. Turkish exporters performed well in the first 10 months of 2014 with an average increase of 5.6 percent. Exports stood at $131 billion in October.
According to Turkish officials, turmoil in Iraq, Syria and Egypt, along with the Islamic State of Iraq and the Levant advance through northern Iraq, and the ongoing Syrian civil war are all factors that have hurt the country's exports this year. . Turkey’s exports to Iraq declined nearly by 25 percent this year. According to Turkish Exporters Assembly, Turkey’s exports to Russia declined by 15 percent in the first 11 months as well.
Exports to the Middle East have been particularly strong. Trade volume with the Middle East increased to $63 billion from $5.9 billion between 2002 and 2012, and now accounts for 16.4 percent of all Turkish trade, according to theTurkish Statistic Institute. "Turkey’s autonomous and independent position has made it a valuable ally for many MENA countries. Turkey’s multiple trade treaties with many countries in the region have made the Middle East the second largest destination for Turkish exports after the European Union," writes Serra Basoglu Gürkaynak, partner and head of corporate at the Istanbul law firm Mehmet Gun & Partners, in a report released in April 2014.
Foreign direct investment has seen an equally healthy trend. Net foreign direct investment in Turkey increased by 4.7 percent to $9.79 billion in the first ten months of the year, according to the Turkish Economy Ministry.
The manufacturing sector, with nearly $1 billion more than 2013, benefited the most from foreign capital with $2.3 billion, and banks and related financial institutions followed with $1.33 billion. Turkey's electricity, gas and water sectors have seen foreign direct investment worth over $1 billion in the first ten months.
And the real estate sector displays insolent good health, as nearly 36 percent of foreign direct investment, $3.6 billion, went to the purchase of luxury units in Istanbul and holiday resorts in Antalya. Sales of houses to foreign buyers jumped by close to sixty percent for the January to November period, data from the Turkish Statistical Authority shows.
"Much of the house purchasing has been by Middle Eastern buyers," explained Julian Walker, director of the Spotblue International Property in London. "These buyers appreciate the somewhat milder summer temperature that Turkey offers.
Also, Turkish destinations are easily accessible from most major cities in the region. The increasing footprint of Turkish Airlines across the region has undoubtedly been a factor in improving house purchasing by foreigners," Walker said.
One challenging trend for Turkish business has been the volatility of the Turkish lira. The Turkish economy dropped from 17th to 19th in the 2014 ranking of the world’s largest economies, according to a study released by British research group Centre for Economic and Business Research on Dec. 26. The Netherlands and Saudi Arabia have now surpassed Turkey. The government maintains its goal, however, to be amongst the top ten largest economies by 2023 with $2 trillion in GDP and $500 billion exports.
“The depreciation of the lira has already eaten into revenues and profits,” said Sinan Ulgen, chairman of the Center for Economic and Foreign Policy Studies, in an interview with the New York Times on February 19.
Turkish companies have borrowed more than $100 billion in foreign currencies, according to International Monetary Fund statistics. When the lira goes down, it becomes more expensive for a Turkish company to make its payments on loans om foreign currencies.
But industrial production has nonetheless been healthy in 2014.
The Chairman of Istanbul Chamber of Industry, Erdal Bahcıvan said: “Despite challenging conditions in 2014, Industrial production increased 3.8 percent for the period of Jan.-Oct. of 2014.”
Bahcivan said Turkish Industrial sector’s exports increased 5.4 percent, precisely because of the lower value of the Turkish lira in 2014 compared with the previous year.
Bahcivan expects that 2015 will be better than this year -- in fact that seems to be the consensus among analysts.
2015 will be much better for Turkey’s exports, said Economy Minister Nihat Zeybekci on Dec. 26.
“We live in such an unpredictable region, where everything can change in a matter of weeks. So many negative developments happened in 2014 that 2015 can’t be worse. We expect Turkey’s trade to recover in the next year, especially with its southern neighbors,” he said at the economy ministry’s annual assessment meeting.
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