Marat Aidagulov: Turkey - Economic and Socio-Cultural Perspectives of the Country in the Context of Global Transformations

How do changes in the global economic arena affect Turkey’s economic role in international relations? Can we expect further growth of the Turkish economy, considering the internal crises that have affected the country this year? What are the strengths of the Turkish economy?
Turkey: Economic and Socio-Cultural Perspectives of the Country in the Context of Global Transformations
As we all know, Turkey is currently going through challenging times. This year, the country experienced several powerful earthquakes, resulting in the loss of tens of thousands of lives and affecting hundreds of thousands of people. The economic damage caused by these events is estimated to exceed $100 billion. It is worth noting that even before the disasters, the country had not fully recovered from the consequences of the coronavirus infection and the accompanying restrictions that have affected the entire world.

Undoubtedly, all above mentioned events had not only economic consequences. The catastrophe could not but affect the material and moral well-being of the population, as well as the political situation in the country. Almost immediately after the disaster, there was widespread criticism of the government, which was accused by citizens of insufficiently prompt response to the unfolding disaster. There were complaints about the lack of equipment and obstacles to providing necessary assistance. Discussions about the professionalism of the builders, who are obliged to comply with certain standards in construction, continue to this day.

Nevertheless, despite the challenging situation, the forecasts for the country’s economic future are overwhelmingly positive among most experts.

The fact is that during the period from 2002 to 2022, Turkey demonstrated one of the sharpest economic growth trajectories in the current century. The country’s volume of foreign trade grew from $80 billion to $614 billion over these 20 years. According to UN data, Turkey’s assets have increased by more than 400%. Turkey’s export growth in 2022 was 13%, and GDP growth was 3.5%. Turkey’s GDP reached $692 billion, securing the country’s 23rd position among the strongest economies in the world. According to the IMF and PWC, Turkey’s GDP is projected to reach $1.1 trillion by 2025 and $1.7 trillion by 2030.

Turkey has emerged as one of the so-called developed countries, opening up new opportunities for international trade and international relations. As a result of these changes, the number of foreign investments in the country’s economy has increased. Currently, Turkey has over 6,000 registered startups, which are actively attracting foreign investors. Six of these startups receive annual investments of over $1.5 billion. Additionally, a crowdfunding platform called Fonbulucu has been launched, leading to a record number of investment funds in the country. In 2022, foreign investors have invested over $11 billion into the Turkish economy, and this year, the Turkish startup ecosystem has secured the 10th position in Europe in terms of investment inflow.

The flow of tourists has increased, contributing to further growth in the tourism business: according to the World Tourism Organization, Turkey was visited by over 30 million people in 2021, placing the country in 4th position in the global ranking for this indicator. The real estate market has experienced significant growth, partly due to the influx of citizens from Russia and Ukraine who are changing their place of residence.

The purchasing power of the population has significantly increased: according to the World Bank and IMF, the country has risen from 20th to 11th place in the global ranking for this indicator. By 2023, the per capita income level in terms of purchasing power parity (PPP) is expected to reach $41 per person, which is almost four times higher than the 2022 figures ($11).

When discussing the structure of the country’s economy, it is important to highlight the tertiary sector, which accounts for over 50% of the overall volume. This sector primarily includes tourism, as well as telecommunications and financial enterprises. The industrial sector takes second place, representing 31.07% and includes industries such as machinery manufacturing, which accounts for about 15% of total export goods. It is worth noting that the country is not only involved in automobile production but also exports machinery products, clothing, steel products, electrical appliances, and high-tech products. The agricultural sector is also well-developed in the country.
Currently, Turkey effectively plays a specific role as a logistical intermediary between Europe and Asia, which is also demonstrated in terms of investments. As is known, the country is investing significant amounts in the development of railway communication and logistics terminals. The government’s immediate plans include more than doubling the total length of roads. The convenient geographical location partly explains Turkey’s positioning as a viable alternative, if not a replacement, to China as the world’s leading supplier. Turkey’s proximity to Europe can significantly reduce transportation costs for goods. Additionally, there is active attraction of Western brands for collaboration. International companies such as Microsoft, Hyundai, Adidas, Coca-Cola, and Nestle have already opened their manufacturing facilities in the country.

The above mentioned facts are of particular significance when considering the current international situation, as well as the logistical constraints associated with various sanction measures in the global arena. The cooperation between Russia and Turkey plays an important role in the current situation. From March to July 2022 alone, Turkey’s exports to Russia increased by 46% compared to the same period in 2021. Against the backdrop of strained relations with Western countries, Turkey is a special economic partner for Russia. However, the benefits are mutual, not only in the field of trade. For instance, Russia is funding the construction of a nuclear power plant in Turkey, and both countries are increasing their mutual settlements in national currencies, which contributes to the strengthening of both the Russian ruble and the Turkish lira.

Prospects for the Turkish economy, despite positive forecasts, are not so straightforward. The situation is also complicated when it comes to general social prospects. The crisis during the pandemic, a series of calamities this year, military conflicts, and internal changes - all of this can negatively impact the well-being of the population and, as a result, the effectiveness in the employment sectors for country’s population.
Turkey has always held a special position, even during the time of the Ottoman Empire, due to its unique geographical and cultural position at the crossroads of Europe and Asia. This particular characteristic has always contributed to the enrichment of the country’s culture and the acceleration of its economic development. However, in the era of globalization, it can also be a cause of internal crises, as was seen in the 2000s with the crisis in relations with the West against the backdrop of the strengthening of internal Islamic identity. Crisis phenomena in the mood of the population can already be observed now, not only against the backdrop of the consequences of earthquakes but also in the context of the issue of global relocation of Russians and Ukrainians, which many perceive as a threat to the country’s national identity.

The United States, the European Union, Russia, China, and Middle Eastern neighbours – Turkey is trying to manoeuvre between different political actors. This is certainly a beneficial but risky strategy.
What's in the dry residue?
Currently, the country’s foreign policy is closely tied to the idea of finding a balance between the West and the East. Importantly, this balance is sought not only on an economic level but also on the value level: a balance between Islamic norms and liberal values, between Eastern and Western culture.

Perhaps this cultural aspect brings Turkey closer to Russia like no other, as Russia is also located between the East and the West, combining elements of both cultural traditions.
  • $ 11 billion

    Foreign investors invested in the Turkish economy in 2022
  • 50%

    Occupies the service sector in the structure of the economy
  • 7.6 times

    The growth of Turkey's foreign trade from 2002 to 2022
  • by 400%

    Turkey's assets have grown, according to UN data
  • Marat Aidagulov
    Entrepreneur and public figure
    Expert on economic development and international cooperation.
    Initiator of the creation of a non-governmental platform for civil coordination and integration in the EAEU space, the Digital Security Convention.