Türkiye offers a promising but complex market requiring adaptability, persistence, and patience. U.S. exporters may face many of the same challenges that exist in other middle-income, growing markets such as unpredictable judicial, legal, and regulatory frameworks; instances of inconsistent policies; burdensome documentation or localization requirements; unanticipated tariff increases on certain products; lack of transparency in tenders, and difficulties with the public procurement process, including price preference for Turkish companies.
Companies may find weakened demand throughout 2023 driven largely by an ongoing currency crisis. Burdensome debt levels (much of which is denominated in USD and euros), a rapidly weakened TL, and limited access to long-term financing, all weigh heavily on foreign or domestic firms’ ability to sustain, much less grow, operations in country. Türkiye is also running current account and capital account deficits exacerbated by increased energy import costs in recent years. In June 2023, the central bank embarked on a series of interest rate hikes since 2021, raising the key rate from 8.5% to 30% over a period of three month through September in an effort to tame inflation. Much of the private sector borrowing in Türkiye has traditionally been via foreign exchange-denominated loans, which have become harder to service as the value of the TL diminishes relative to the USD or the Euro.
The most effective method for potential investors to address these obstacles is to work with a Turkish partner to obtain local insights and determine potential solutions. Careful planning and a long-term outlook are key to success in Türkiye. CS Türkiye is here to help U.S. business navigate the Turkish business environment by identifying reputable local partners.