The Republic of Türkiye, with the 19th largest nominal gross domestic product (GDP) and 11th largest GDP based on purchasing power parity (PPP), has long drawn the presence of U.S. corporations across sectors. Türkiye’s young population of approximately 85 million and highly favorable geostrategic location positively impact its investment climate. However, economic challenges catalyzed by the COVID-19 pandemic and exacerbated by persistent unorthodox monetary policy overshadow this promising market. Steep inflation, a weakening currency and an increase in protectionist and populist measures, including import tariffs and localization pressures, complicate Türkiye’s ability to reach its economic goal of becoming a top-10 economy. Nevertheless, more than 1,000 U.S. firms, including many of the United States’ largest and most recognized brands, have been active in Türkiye for decades.
According to Government of Türkiye (GoT) statistics, the Turkish economy grew 5.6% in 2022, down 5.5% from 2021. Türkiye’s economy in 2022 was impacted by a drop in domestic and foreign demand which was exacerbated by high energy prices, and a series of devastating earthquakes in February 2023 resulting in widespread destruction throughout the country’s southern region.
May elections resulted in the re-election of President Recep Tayyip Erdogan and the installation of a new cabinet meant to signal stability to Western investors. Since the elections, the Turkish central bank initially raised the country’s interest rate from 8.5% to 15% and subsequently increased the rate twice more in August and September, to its current rate of 30%, indicating a shift toward more conventional monetary policy. The impacts of this policy reversal remain to be seen. As of the time of writing, the USD to TL exchange rate stands at around USD 1 = TL 27.
Total trade between the United States and Türkiye topped $34 billion in 2022, up approximately 21% from 2021. Exports totaled over $15 billion; imports were approximately $18.8 billion. A marked increase in exports to Türkiye of LNG; aircraft parts; textiles; and certain iron and steel products; as well as an increase in imports to the U.S. of machinery; precious stones and metals; vehicle parts; and certain mineral fuels drove the increase in value of bilateral trade. At the time of writing, U.S.-Türkiye trade is down 12.4% YTD due primarily to a decrease in U.S. exports of LNG.
In 2022, U.S. goods accounted for a little over 4% of total Turkish imports. The United States was Türkiye’s fifth-largest source of imports (behind China, Russia, Germany, and Switzerland). An increase in tariffs in 2018 and 2019 on a range of U.S. products may put some U.S. exporters at a disadvantage relative to their European competitors who share a Customs Union agreement with Türkiye and therefore do not face the same trade barrier. Still, U.S. brands overall continue to enjoy widespread favorability and recognition among Turkish consumers.
For several decades, the United States and Türkiye have enjoyed a strong political and military relationship. Both countries partner closely on a range of regional and international concerns. A NATO member since 1952, Türkiye has supported missions around the world, including Afghanistan, Iraq, the Balkans. Notably, Türkiye has received over four-million refugees from Syria, Iraq, Afghanistan, and other countries, making it the world’s largest host for refugees. The robust U.S.-Türkiye economic relationship has continued to serve as a critical foundation despite certain geopolitical divergences.
U.S. firms, many with the assistance of the U.S. Commercial Service in Türkiye (CS Türkiye), continue to pursue energy, aerospace, defense, infrastructure, transportation, healthcare, and ICT projects throughout the country. Often with the assistance of the U.S. Government’s SelectUSA Program, Turkish companies continue to invest heavily in the United States, in part to act as a potential buffer against a weakening Turkish economy. In 2022, U.S. direct investment in Türkiye was $5.8 billion, a decrease of 7.4% from 2021. Direct investment from Türkiye in the United States was $2.9 billion, an increase of 1.4% from 2021.
To map out the opportunities and better understand the challenges of doing business in Türkiye, U.S. firms, both large and small, are encouraged to contact CS Türkiye for market information, updates on regulatory issues, major projects, and business developments. With offices in Ankara, Istanbul, and Izmir, we encourage business visitors to meet with our multilingual, sectoral-focused business development teams for individualized market consultations. For more information, visit the CS Türkiye website and the U.S. Embassy in Türkiye website.
Political & Economic Environment: State Department’s website for background on the country’s political environment