Economic Analysis


Population 84.7 million
GDP per capita 9,654 US$
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major macro economic indicators

  2020 2021 2022 (e) 2023 (p)
GDP growth (%) 1.9 11.4 5.5 3.5
Inflation (yearly average, %) 12.3 19.6 72.3 50.0
Budget balance (% GDP) -3.5 -2.8 -3.4 -3.5
Current account balance (% GDP) -4.9 -1.7 -6.5 -3.5
Public debt (% GDP)* 39.7 41.8 42.5 42.0

(e): Estimate (f): Forecast *general government gross debt


  • Strong post COVID-19 recovery
  • Strategic geographic location, proximity to key export markets
  • Very diversified manufacturing tissue, strong production knowledge
  • Young population, educated workforce
  • Narrowing current account deficit
  • Renewables account for 53% of Turkey’s total installed power capacity


  • Dependence on imported energy and intermediate goods
  • High inflation, local currency hitting record weak levels
  • Vulnerability resulting from high level of short-term private external debt, low level of gross international reserves
  • Credit-driven growth performance causing a high level of debt, overheating risk
  • Uncertainty over the monetary policy


Worsening inflation outlook amid slower growth in 2022

After growing by a stronger-than-expected 11% in 2021, Turkey’s economy will slow in 2022 mainly on the back of sharp increases in energy prices and supply disruptions in key commodities due to the war in Ukraine. Turkey imports nearly 30% of its natural gas from Russia, as well as nearly 20% of metals and chemicals required for its domestic production. Imposition of Western sanctions on Russia, the removal of some Russian banks from the SWIFT system and the closure of some ports in the Black Sea region due to the war have affected negatively trade flows between Russia and Turkey. Uncertainties about payments will deter many companies to trade with Russia. On the other hand, the negative base effect and rising inflationary tensions will hamper growth performance. The drop in purchasing power of households will weigh on private consumption (60% of GDP). Due to the heavy sell-off of the Turkish lira in November and December 2021 and globally rising commodity prices, inflation is expected to hit 70% on an annual basis in May. Pass-through impacts from producer prices, which skyrocketed in February (+105% YoY), will be a key driver of inflationary pressures. The slowdown in domestic demand will restrain companies’ ability to pass rising production costs to their clients, leading to lower profit margins. With the front-loaded central bank rate cuts (500 basis points between September and December 2021), the resulting lira depreciation and cheaper credit, the authorities will continue to support investment, exports, and employment. The government’s announcement of a new financial mechanism based on protecting local currency deposits from the lira’s depreciation may shield the lira in the short-term. However, as the interest rate is limited to three percentage points in addition to the central bank’s policy rate (currently at 14%), the new tool may not be to able offer adequate remuneration to the lira investors compared with inflation. On the other hand, extremely high inflationary pressures may push the central bank to halt the rate cut cycle in the upcoming period. On the back of three-year high capacity utilisation rates (78% as of December 2021), machinery and equipment investments seem to continue after increasing for nine consecutive quarters as of Q4 2021. However, uncertainty resulting from the geopolitical situation and fragile financial stability are likely to weigh on companies’ decisions in 2022. 


Current account deficit to widen again due to the soaring energy bill

Despite benefiting from a weaker lira and diversification of supply chains globally, exports will be affected by the global stagnation resulting from the impacts of the war in Ukraine. Lower demand in EU markets will weigh on Turkish exports to this zone (around 40% of total exports), pushing exporters to diversify their key clients towards other markets. Concomitantly, the import bill will continue to increase due to soaring commodity prices and manufacturers’ willingness to build inventories to counter supply issues. In January-February 2022, Turkey’s energy imports in 2021 – which represent 93% and 99% of oil and gas consumption, respectively - jumped to USD 16.8 billion, from USD 5.4 billion a year earlier, according to the International Energy Agency (IEA). The sharp increase in oil prices will halt the narrowing of the current account deficit. Another important challenge for Turkey’s economy would be related to the crucial tourism revenues (3% of GDP in 2021). Last year, Turkey attracted nearly 30 million tourists, out of which 4.7 million were from Russia and 2 million were from Ukraine (in 2019, 45 million tourists came to Turkey, out of which 7 million from Russia and 1.5 million from Ukraine). Given the current situation, it may be difficult for Turkey to reach the end-2022 tourism revenue forecast of USD 35 billion. This will also contribute to the widening of the current account deficit. Turkey’s need to attract foreign investments will remain high due to the high short-term external debt level (as of Q2 2021, gross international reserves covered 77% of short-term external liabilities), which leaves the economy vulnerable to the volatility in international investors’ sentiment.

The public accounts should remain solid, although the government is likely to increase current spending from the second half of 2022, ahead of the presidential election (June 2023), after reducing VAT (from 18% to 8%) on electricity, hygiene products and medical equipment in March 2022 to counter inflation. The state-proposed protection of savings against lira depreciation may create a burden on the budget. Nevertheless, the outlook of the public debt should not represent a key risk for Turkey, as it remains low as a share of GDP. However, it is important to note that rising stocks of FX debt (60% of the total as of early 2022, compared with 45% in 2018) may represent a source of volatility.


Domestic political tensions may increase ahead of elections 

As elections get closer (June 2023), risk of polarisation within the society may increase. However, this should not threaten the political stability of the country. Recently, moving beyond regional issues of contention, Turkey has restored its relations with the United Arab Emirates (UAE). In November 2021, both countries signed bilateral cooperation agreements in multiple fields including trade, energy and environment. According to some media reports, Saudi Arabia, Egypt and Israel have also taken action to create a new level of relations with Turkey. These improvements are expected to have reciprocal positive economic contributions.


Last updated: March 2022


Traditional credit payment instruments are still in common use in Turkey’s domestic market, as they often serve as negotiable instruments. This is the case for promissory notes, a solution regularly used by SMEs for commercial transactions. Similarly, post-dated cheques serve as both a title of payment and a credit instrument. Cheques circulate in the domestic market as negotiable instruments until their maturity date. An amendment, which came into effect on the July 15, 2016, imposes a punitive fine on the person responsible for a “dishonoured cheque”. If the fine is not paid, the punitive measure can be transformed into a prison sentence of up to 1,500 days. In such cases, neither settlement nor prepayment are executed. In addition, the drawer of a dishonoured cheque is subsequently banned from drawing cheques or opening cheque accounts. After payment of cheque amount or ten years of the court decision, a ban shall be removed. Although banks are now required to exercise greater vigilance with regard to the profiles of their clients, the law concerning cheques, which came into force in December 2009 provides for large financial sanctions, which are payable by the drawer of the cheque in cases of non-payment.

The SWIFT electronic network is well-established in Turkish banking circles and constitutes the most commonly used instrument for international payments. 

Debt Collection

Amicable phase

Amicable procedures, which involve the sending of a formal notice to pay, followed by repeated telephone calls, remain a relatively effective method. On-site visits can also pave the way for restoring communications between suppliers and customers, thereby enhancing the chances of completing successful negotiations. The civil procedure code specifically states that the judge may at any time during legal action encourage the amicable settlement of the dispute, provided that it results from a real desire by the parties to seek an out-of-court settlement via a negotiated transaction.

The Law on Mediation in Civil Disputes stipulates that mediation shall be applied only in the resolution of private law conflicts arising from acts or transactions of interested parties who have the capacity to settle such conflicts. The parties are free to apply to a mediator at any time, in order to continue, finalise or abandon the process.

Depending on the debtor’s solvency, the terms of the transaction can range from payment in full, to repayment by instalments, to a partial payment as final settlement. In the absence of a voluntary settlement, the threat of a bankruptcy petition (iflâs) is a frequently employed tactic to elicit a response from the debtor and prompt them to pay the arrears.


legal proceedings
Debt execution procedure – via an Administrative Body

 Negotiable instruments, such as bills of exchange, promissory notes and cheques, enable creditors (without obtaining a prior ruling) to directly approach the enforcement office (Icra Dairesi) for serving the debtor with an injunction to pay. They can then, if necessary, proceed with the seizure of the debtor’s assets. Seizure is a process that begins with filling an order for payment, which is then served to the debtor. If there are no objections to the order, the assets of the debtor are liquidated to cover the claims. If the order is not accepted by the debtor, he has the possibility to request that the creditor proves the claim in court. The debtor has ten days to settle the arrears in question, or five days to approach the enforcement court and oppose payment on grounds that, for example, the signature on the document is not his own, or that the debt no longer exists.

If the creditor decides to serve the debtor with an injunction to pay despite the fact that it does not hold negotiable instruments, such as bills of exchange, promissory notes and cheques, the debtor can object to the injunction to pay in 7 days after receiving it. This objection suspends the enforcement proceedings until the creditor files and wins an action for annulment of objection suit regarding its claim. With the regulation that came into force on 1.1.2019 applying to the mediator became a precondition for the cases that are filed against the claims for the payment of a certain amount of money and compensation. Therefore, in order for the creditor to file the action for annulment of objection suit to resume the execution process it first has to apply to the mediator.

If the opposition is deemed to be abusive, the debtor is liable to large penalties.


Litigation procedure – examined by the Court

If the pre-legal procedures for the collection of the debt from the partner/supplier fail, a lawsuit can be brought against the debtor before commercial courts. The commercial court (asliye ticaret mahkemeleri), which is a specialised chamber of the court of first instance, is competent to hear commercial disputes and insolvency proceedings. In cases where the validity of the claim is disputed, the only recourse is to initiate ordinary proceedings, via a summons, to appear in court.

If Turkey has not signed a bilateral treaty or a reciprocity treaty with the plaintiff’s country, the plaintiff is required to put up a surety bond, judicatum solvi, with the competent local court. This amount represents approximately 15% of the claim. The same pertains to Turkish applicants with no permanent residence in Turkey. At the end of the litigation procedure, the security deposit is refunded to the creditor by the court.

The plaintiff is also obliged to put up one quarter of the court fees, which are proportional to the amount of the claim, at the commencement of the proceedings. In addition, notarised documents must be presented to the court.

Ordinary proceedings are organised into three phases. The first involves position statements from each party (a statement of claim and a statement of defence). In the second and lengthier phase, the court investigates the case and examines the relevance of the evidence submitted, to see whether it is conclusive or discretionary evidence. Finally, in the main hearing that constitutes the third phase, the court hears both parties and their lawyers before issuing a ruling.

Enforcement of a Legal Decision

Any legal decision can be fulfilled via enforcement and bankruptcy offices/officers, if the person who is ruled against, does not performs legal decision voluntarily on time. Enforcement differs slightly depending on the type of debt, but it generally resembles the Debt Execution Procedure. However, in contrast with the Debt Execution Procedure, the objection to the enforcement of a legal decision is an exceptional situation.

Insolvency Proceedings


The debtor subject to bankruptcy can apply for a proposal of composition agreement (konkordato projesi). If the proposal appears to the commercial court to be viable, the court imposes a moratorium and appoints a composition commissioner (konkordato komiseri) to examine the debtor’s affairs. The most common form of proposal is for a total or partial repayment over a period of time. However, a proposal may also take the form of an assignment of all or part of the debtor’s assets in satisfaction of creditors’ claims.  If the proposal is not approved, a bankruptcy order may be rendered.



The debtor will designate some or all of its assets for its creditors, propose that those assets are sold (or transfer to third parties), and that the proceeds of the sale should be distributed to creditors. A debtor wishing to restructure (or a creditor having the right to institute bankruptcy proceedings) may apply to the competent execution court with a reorganisation project. If the execution court determines that the project is likely to be successful, it will order a creditors’ meeting to decide whether they accept the reorganisation project. If approved, the project will then be submitted to the court for approval. If the court determines that reorganisation will be more lucrative than bankruptcy, it will approve the project.



A debtor company facing financial difficulty or imminent risk of insolvency has the right to apply to the commercial court for approval of a restructuring project previously approved by the required quorum of creditors affected by it (impaired creditors).

The new EBC (Enforcement and Bankruptcy Code) provisions encourage the debtor and its creditor to reach a voluntary arrangement to rehabilitate the distressed but still viable business. The contents of the proposal enter into force after acceptance by the creditors and approval of the court. However, creditors have the right to apply to the court for relief if the debtor does not fulfil its obligations under the project. The court has a right to declare the debtor bankrupt following any non-compliance. Restructuring is only available for companies and co-operatives with the exception of banks and insurance companies.


Ordinary bankruptcy

The creditor begins this form of proceeding by requesting the execution office to serve on the debtor an order to pay for a due debt. The debtor has seven days after service in which to dispute the debt or pay. If the debtor fails to pay or dispute the debt, the creditor may apply to the commercial court for a bankruptcy order, which the court will generally grant.


Direct bankruptcy

A creditor or the debtor may file an application for direct bankruptcy. The debtor must submit a list of assets and liabilities together with the names and addresses of creditors. The creditor may apply for direct bankruptcy where: the debtor has absconded to avoid its obligations (transfer of the headquarter abroad); the debtor has engaged in fraudulent transactions which threaten the interests of creditors; the debtor has concealed assets to avoid execution; the debtor has suspended payments as they fall due to creditors; the debtor has failed to satisfy a final judgment served on it by the execution office; a voluntary arrangement proposal has been rejected by the court or a moratorium period is cancelled by the court; or the debtor may apply for the bankruptcy of the company on the basis of inability to pay its debts as they fall due in case of the debtor’s liabilities exceed its assets.


Consequences of bankruptcy

The bankrupt loses control of its assets and only the administrators have the authority to dispose of assets in the estate. If the bankrupt has no assets, the value of the assets is insufficient to cover the costs of the proceedings or the creditors are not prepared to put up the costs, the bankruptcy may be suspended.

The first meeting of creditors is convened, during which are appointed three bankruptcy administrators, and it is considered whether it is appropriate to propose an arrangement. The second meeting of creditors is to consider the delay and manner of the disposal of the bankruptcy estate (often by public auction), then to fix the order of priority for the creditors who have lodged their claims.

The claims of a higher rank of creditors must be satisfied in full before creditors of a lower rank receive a dividend, but creditors rank equally within each class. Creditors whose claims remain unsatisfied receive a certificate of insolvency.

Transactions performed by debtor in a state of insolvency up to one year prior to the bankruptcy order, free transactions up to two years prior to the bankruptcy order or transactions executed with the purpose of damaging a creditor’s interests up to five years prior to the commencement of legal proceedings for recovery of the debt (including bankruptcy proceedings), can be subject to an annulment recourse by a creditor. The administrators make a final report to the court which then makes an order closing the bankruptcy.

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