TURKEY

Will the shift to orthodox monetary policies last this time?

C3

SENSITIVE RISK for enterprise

  • Economic risk

  • Business environment risk

  • Political risk

  • Commercial risk

  • Financing risk

  • Economic risk

  • Business environment risk

  • Political risk

  • Commercial risk

  • Financing risk

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GDP USD720.1bn (World ranking 19, World Bank 2020)
Population 82.33mn (World ranking 17, World Bank 2020)
Form of state Republican Parliamentary Democracy
Head of government Recep Tayyip ERDOGAN (President)
Next elections 2023, presidential and legislative
  • Important geostrategic position (that has historically always ensured aid when needed)
  • Adequate business environment (though deteriorating)
  • Potential as regional hub between Europe, MENA and Asia
  • Exchange rate vulnerability to domestic and external shocks
  • Economic policy responsiveness
  • History of persistently large current account deficits, largely financed through short-term external debt, which has risen to a very high level in the meantime
  • (External) debt refinancing risk of weaker companies and banks, exacerbated by the currency crisis in 2018-2019 and again by the Covid-19 crisis in 2020
  • Deep-rooted division in society between secularists and religious conservatives
  • Geopolitical risks

Trade structure by destination/origin

(% of total, 2020)

Exports Rank Imports
Germany 9.5%
1
11.2% China
United Kingdom 6.7%
2
10.5% Germany
United States 6.0%
3
8.6% Russia
Iraq 5.4%
4
5.6% United States
Italy 4.8%
5
4.5% Italy

Trade structure by product

(% of total, 2020)

Exports Rank Imports
Road vehicles 15.2%
1
11.4% Gold, non-monetary (excluding gold ores and concentrates)
Articles of apparel & clothing accessories 9.2%
2
6.7% Road vehicles
Textile yarn and related products 8.8%
3
5.8% Iron and steel
Iron and steel 6.9%
4
5.5% Electrical machinery, apparatus and appliances, n.e.s.
Electrical machinery, apparatus and appliances, n.e.s. 5.8%
5
4.8% Other industrial machinery and parts
The payment behavior of domestic firms has a significant margin for improvement and normal payment terms seem excessive. In fact, as a result of the trend in long payment duration, the value of unpaid receivables has grown considerably in recent years.

  • Low

  • Medium

  • Sensitive

  • High

  • Payments

  • Court proceedings

  • Insolvency proceedings

  • Payments

  • Court proceedings

  • Insolvency proceedings

 

Domestic courts lack independence, the rule of law perception is moderate, and the chances of obtaining payment through legal action are lower than through strong pre-legal negotiation efforts.

Debt renegotiation proceedings before the courts are not generalized and when it comes to insolvency issues, liquidation remains the default proceeding even though liquidation sales rarely yield efficient results and may not be in the creditors’ best interest.

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