Turkey, Fastest Growing G20 Country in 2017

Date: May 2018

Turkey Unveils Super Incentives for High-Impact Investments

Turkey recently introduced one of the most competitive investment incentive packages in emerging markets in a move to foster economic growth by stimulating industrial production and boosting exports.

Aimed at technology investments in the petrochemicals, energy, metals and mining, healthcare, manufacturing, and agricultural industries, the comprehensive package of incentive certificates is worth TRY 135 billion and covers 23 projects. 19 companies received project-based certificates that were granted in person by President Recep Tayyip Erdoğan during a ceremony held in the Presidential Complex in Ankara.

The introduction of these incentives is set to further empower Turkey’s position against emerging markets such as Mexico, India, and Indonesia. The incentive instruments cover a broad range that includes land allocation, various tax refunds/ exemptions/reductions, insurance premium support, and utility support. It is expected that these incentivized projects will help to reduce Turkey's current account deficit by USD 19 billion in 2-3 years, while boosting output in high-tech and mediumhigh tech products that are import dependent, such as electric batteries, drug-eluting stents, energy systems, and hybrid engines.

As per the program, Assan, BMC, CFS, Dow Aksa, SASA, Most Makine, Metcap Energy, Oyak Renault and Vestel will engage in medium-high tech investments, while Alvimedica, Atayurt, Ekore, and TAI will undertake high-tech investments. Vestel will grab the largest incentive worth TRY 28.4 billion for electric vehicle energy storage systems and is expected to contribute the lion’s share to the reduction of the current account deficit to the tune of USD 4.6 billion annually. Oyak Renault's hybrid engine production project is another

high-tech investment that will make a substantial annual contribution of USD 2.3 billion to reduction of the current account deficit.

Nearly 34,000 people will be offered direct employment, while indirect employment is expected to hit upwards of 134,000 with the initiative.

Turkey Fastest Growing G20 Country in 2017

Beating expectations, the Turkish economy grew by 7.4 percent in 2017 according to data released by the Turkish Statistical Institute (TurkStat). The high growth rate saw Turkey become the fastest growing G20 economy in 2017, surpassing China and India, which recorded 6.9 percent and 6.4 percent growth respectively. Turkey's GDP growth rate for the last quarter of 2017 was 7.3 percent, and the sharp 11.1 percent growth in the third quarter of 2017 was revised to 11.3 percent.

Fiscal measures taken by the government, such as the Credit Guarantee Fund, have spurred a strong increase in economic activity in Turkey and have had a favorable impact on the robust growth achieved in 2017. The growth was mainly fueled by strong household

consumption and rising investments, which respectively contributed 3.7pp and 2.2pp to the 7.4 percent growth rate in 2017. Investments in the machinery sector also continued to show signs of optimism.

Recently announced super incentives for a number of investment projects are also expected to accelerate growth in 2018. The growth figure of Turkey in 2017 is likely to cause an upward revision to international organizations’ growth forecasts for this year. 

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