Turkish Economy in 2023: An Important Milestone in History

Turkey's GDP

Since 2002, Turkey's GDP has grown from $241 billion to $941 billion by 2022. This is one of the strongest gains in the world this century. One of the fruits of this level of economic growth has been Turkey's place in the larger global economy. By today's modern standards, the "advanced" countries that have emerged within the past two decades have opened up to global trade and been recognized by all the world's major developed superpowers.

Foreign Direct Investment

According to the Turkish Ministry of Commerce, between 2002 and 2022, more than 78,000 people landed in Turkey in search of manufacturing opportunities. This number is up from 5,600 companies in 2002. Many companies chose Turkey during this period, in direct competition with many of Turkey's European neighbors.

Foreign Trade

During the same period, Turkey's foreign trade volume increased from USD 80 billion in 2002 to USD 614 billion in 2022. The combination of foreign trade growth and foreign investment capital has led to a boom in Turkish economic growth. According to United Nations statistics, Turkey's assets have grown by more than 400% in the past two decades.

Per Capita Purchasing Power

Many technological products and infrastructure modernization projects have sprung from this boom, making Turkey one of the most promising emerging economies in the world. Turkey has risen from the world's 20th largest economy to the 11th largest in terms of per capita purchasing power, according to the International Monetary Fund and the World Ba​​​​​​​nk.

Tourism

The traveling world population does not ignore the rising status around the world. Tourism, history, leisure, medicine, etc. are among the most affected industries in Turkey in this century. According to the World Tourism Organization, Turkey attracts the world's fourth-largest tourist destination, with more than 30 million tourist arrivals in 2021. This figure has already surpassed European competitors such as Spain, the United Kingdom and Italy this year. Compared to the total of 5.4 million tourists in 1990, we can really see the new level Turkey has reached in the eyes of the world's elite.

Real Estate

All these relatively new investments in Turkey have prompted many foreigners to invest heavily in Turkey's foreign-friendly real estate market. In 2013, the total number of houses sold in Turkey to foreigners was about 12,000. By 2021, that number has risen to more than 58,000. Of those 58,000 sales, more than half were actually sellers' second or subsequent property purchases. This shows that a growing number of investors are experienced and successful in this untapped market.

Pandemic and Inflation

Unlike the rest of the world, Turkey is experiencing economic inflation and dismal indicators today. Fortunately, Turkey's real economy and infrastructure have developed rapidly this century, and its growth prospects through 2023 are not inhibited. Even with its neighbors Ukraine and Russia at war, Turkey remains steadfast, capable of surviving, prospering and taking advantage of whatever opportunities the 2020s present. As Turkey's young population continues to power its economy, the world should expect Turkey's inflation rate to fall. The TCMB and IMF expect Turkey's absurd inflation rate to drop to 22% by 2024 and 5% by the end of 2025.

Turkey's GDP

Given Turkey's current economic environment, and looking at leading indicators in a vacuum, one could be confident that it will undermine Turkey's medium- to long-term growth prospects. However, this is a mistake and a misunderstanding of where Turkey is currently in terms of economic growth potential. Turkey's gross domestic product will reach $1.1 trillion in 2025 and $1.7 trillion in 2030, according to forecasts by the International Monetary Fund and PricewaterhouseCoopers.

Foreign Direct Investment

The main driver of this growth in the past was the inflow of foreign direct investment capital into Turkey. By 2023, Turkey is expected to increase foreign direct investment by US$15 billion. This would bring the total foreign direct investment reserves since 2000 to $266 billion.

Per Capita Purchasing Power

Even in our current environment of global recession and bloat, Turkey's economy has experienced steady growth in terms of local real purchasing power. This is mainly due to the amount of economic activity, productivity and dynamism of Turkey's young, educated population. In 2002, the per capita PPP was $11. $41 in 2023. By 2030, the IMF and PwC forecast a value of around $55. In other words, despite developments in the Turkish lira, inflation and other negative indicators, the quality of life of Turkish citizens will steadily improve again during this decade.

Tourism

In a successful and prosperous place, you can expect to attract a lot of tourists. Especially when this prosperity is happening along the Mediterranean coast. If Turkey can capitalize on the tourism gains it has reaped from the pandemic, it will be able to weather its neighbor's catch-up season and potentially gain a foothold in the coming years. With miles of the longest Mediterranean coastline of any country, Turkey does well to soak up waves from Europeans and citizens of the world.

Real Estate

There is a large group of Ukrainian and Russian tourists who not only visit Turkey's Mediterranean coast, but also permanently move to these hotspots. The influx of migrants onto the streets of Istanbul has also increased steadily. From a real estate perspective, as long as Turkey's central authority focuses on FDI growth, there will be ample buying opportunities for foreign investors. Whether it's favorable exchange rates, real estate prices, Turkish citizenship regulations or all of these, there is no other place in the world that is as grossly undervalued as Turkey.

TL;DR

Throughout the century, Turkey has been a powder keg of explosive growth in terms of economy and development. Like all domestic economies around the world, Turkey is reeling from the fallout from the COVID pandemic, soaring inflation and regional wars. Against this economic backdrop, however, Turkey is as well positioned as any emerging market to continue and even exceed its explosive growth trajectory. While foreign investment involves many risks, Turkey's demographic and economic conditions offer real estate investors a rare combination of premium location, premium development, premium growth, and premium exit. As if that wasn't enough, Turkey is adding additional citizenship and favorable exchange incentives to further its FDI activity. These opportunities will not last forever, and may not even last until the end of 2030, when Turkey ushers in a new era as a global central superpower.