Published on and written by Cyril Jarnias
Turkey, at the very heart of the confluence between Europe and Asia, stands as a true breeding ground of opportunities for investors seeking to energize their portfolios. Bolstered by its strategic position and rapidly transforming economy, the country offers particularly attractive prospects in key sectors such as renewable energy, which meets growing demand both nationally and internationally, and information technology, a catalyst for innovation and competitiveness.
Furthermore, the food industry, drawing on a rich and varied culinary tradition, also represents a promising field with significant growth capacity. Through this article, we will explore Turkey’s current economic dynamics, highlighting the promising sectors likely to attract the attention of savvy investors.
Analyzing Turkey’s Economy: A General Overview
Historical Context and Major Reforms
The Turkish economy has undergone several phases of transformation since the foundation of the Republic in 1923. After an initial period focused on state-led industrialization and import substitution in the 1930s, Turkey shifted towards a more open economy from the 1980s onward. Driven by Turgut Özal, structural reforms were adopted:
- Liberalization of foreign trade: lowering customs barriers and encouraging exports.
- Mass privatizations: reduction of the public sector and state disengagement from direct management of the economy.
- Devaluation and floating exchange rate regime: to stimulate export competitiveness.
- Opening to foreign investment and adoption of European standards with the customs union for industrial products in 1996.
In the 2000s, facing the 2001 financial crisis, additional measures were taken:
- Central Bank autonomy.
- Restructuring and recapitalization of the banking sector.
- Control of public spending and political stability under the AKP, fostering investor confidence.
Thanks to these reforms, Turkey displayed sustained growth in the 2000s, overcoming the 2008-2009 global crisis due to the strength of its financial institutions.
Key GDP Sectors
| Sector | Estimated Share of GDP | Main Characteristics |
|---|---|---|
| Manufacturing Industry | Approx. 23-25% | Textiles, automotive, home appliances, steel, chemicals |
| Services (incl. tourism) | Over 60% | Tourism, trade, transport, finance |
| Agriculture | 6-7% | Cereals, cotton, fruits, vegetables, livestock |
- Manufacturing Industry: engine of exports, competitive in European and Middle Eastern markets.
- Tourism: strategic sector, major contributor in foreign currency, sensitive to geopolitical risks.
- Agriculture: although its share is decreasing, it remains important for employment and agricultural exports.
Foreign Trade
- Main trading partners:
- European Union (notably Germany, Italy, Spain): primary outlet for industrial exports.
- Russia: key energy supplier (gas, oil).
- China: growing partner, especially for imports.
- United States, United Kingdom, Iraq: other important partners.
- Trade balance:
- Chronic deficit, linked to dependence on energy and intermediate goods imports.
- Exports are diversified (manufactured products, textiles, agri-food), but the energy bill heavily weighs on the trade balance.
Current Economic Challenges
- High inflation: inflation remains structurally strong, with recent peaks exceeding 80%, eroding purchasing power and complicating economic planning.
- Exchange rate: the Turkish lira has undergone significant depreciation, increasing the country’s external vulnerability and making imports more expensive.
- Public debt: although as a percentage of GDP it remains moderate, debt servicing and dependence on foreign capital constitute a risk factor, especially in a context of market volatility.
Outlook and Opportunities for Investors
Future trends:
- Continued industrial diversification and technological upgrading.
- Desire to attract foreign direct investment, particularly in renewable energy, electric vehicles, and infrastructure sectors.
- Strengthening ties with Asian and Middle Eastern markets, complementing the traditional relationship with the EU.
Potential opportunities:
- Innovative sectors: ICT, fintech, logistics, clean energy.
- Young and dynamic domestic market: demographics offer strong consumption potential.
- Geostrategic position: logistics hub between Europe, Asia, and Africa.
Risks to monitor:
- Political uncertainties and regional geopolitical tensions.
- Volatility in monetary policy and increased economic interventionism.
- Structural challenges: low agricultural productivity, energy dependence, regional inequalities.
Key takeaway: The Turkish economy presents high growth potential, based on a competitive industrial fabric, a young workforce, and a strategic geographical position. However, macroeconomic stability and the predictability of public policies remain essential conditions to reassure investors and guarantee sustainable development.
Good to know:
The Turkish economy has undergone significant reforms since the late 1980s, gradually liberalizing and integrating more into the global economy, which has stimulated GDP growth and diversified economic sectors. Currently, the manufacturing industry, particularly automotive and textiles, plays a key role, followed by tourism, thanks to a rich cultural and natural heritage, and agriculture, although its weight has declined. In terms of foreign trade, Germany, the UK, and China are among the main partners, but Turkey’s trade balance shows a persistent deficit. Challenges include high inflation, a volatile currency, and growing public debt, posing risks to economic stability. However, investments in infrastructure and renewable energy offer opportunities, while geopolitical tensions and monetary policies influence future prospects.
Promising Sectors in Turkey: Opportunities for Investors
Information and Digital Technologies
Rapid growth: The digital sector is experiencing notable expansion, supported by the accelerated adoption of emerging technologies.
Sought-after profiles: High demand for developers, AI engineers, cloud specialists, cybersecurity experts, and data scientists.
Incentives: Government policies favoring innovation, research subsidies, and tax exemptions for tech companies.
Infrastructure: Technology parks, incubators, and high-performance fiber optic networks.
Renewable Energy
High potential: Turkey is betting on solar, wind, and hydroelectric power to diversify its energy mix.
Incentive measures:
- Guaranteed purchase tariffs for green electricity production.
- Tax reductions and eased customs duties on equipment imports.
Infrastructure: Expanding energy transport networks, regional interconnections.
Tourism
Post-pandemic dynamism: Spectacular rebound in 2024, with record numbers of international visitors.
Growing segments:
- Coastal and cultural tourism.
- Medical and wellness tourism.
Public support: Promotion programs, simplified investment procedures, tax relief for new hotel projects.
Infrastructure: Modern transport networks, international airports, growing accommodation capacity.
Automotive
Top exporting sector: $3.4 billion in exports in the first five months of 2025.
Robust ecosystem: Presence of major global manufacturers, dense network of local subcontractors.
Competitive advantages:
- Free trade agreements with the EU (Customs Union).
- Skilled workforce and competitive production costs.
Public support: Dedicated industrial zones, incentives for electric vehicle production.
| Sector | Key Figures (2024-2025) | Incentives/Advantages | Available Infrastructure |
|---|---|---|---|
| Digital/IT | Double-digit annual growth | R&D subsidies, exemptions | Tech parks, fiber optics |
| Renewable Energy | 15% of energy mix in 2025 | Guaranteed tariffs, eased taxation | Expanding power grids |
| Tourism | Record visitors in 2024 | Tax relief, promotion | Hotels, airports, transport |
| Automotive | $3.4 Bn exports (Q1-2025) | Industrial zones, export aids | Ports, logistics, auto clusters |
Turkey’s Competitive Factors
- Geostrategic position between Europe, Asia, and the Middle East.
- Young and skilled workforce.
- Facilitated access to European markets via the Customs Union.
- Pro-investment policies: simplified administrative procedures, investor protection, regulatory stability.
Tax Incentives and Support for Foreign Investment
- Corporate tax exemptions for certain strategic activities.
- Social security contribution reductions for employing young graduates and skilled workers.
- Investment subsidies in technological and industrial zones.
Summary of Assets
Dynamism in the technology, automotive, tourism, and renewable energy sectors.
Attractive public policies, modern infrastructure, unique geographical positioning.
Tax advantages, competitive costs, and privileged access to major markets.
Good to know:
Turkey offers considerable opportunities for investors in high-growth sectors such as renewable energy, where the government aims to increase the share of clean energy to 30% of the energy mix by 2030, supported by tax incentives and a favorable regulatory framework. The technology and digital industry benefits from growing dynamism with a flourishing startup ecosystem, particularly in Istanbul, and state-of-the-art telecommunications infrastructure. Furthermore, the automotive sector, driven by a skilled workforce and international partnerships, continues to attract investment, ranking 15th globally for vehicle production. Tourism, increasing by 20% in annual revenue, is an economic pillar, supported by cultural richness and airport infrastructure improvement projects. The government’s proactive policies, including free zones and double tax benefits for foreign investors, enhance Turkey’s competitiveness, offering a strategic passage point between Europe and the Middle East.
Impact of EU Investment on the Turkish Economy
Investment from the European Union (EU) in Turkey plays a major role in the transformation and growth of several key sectors, including infrastructure, manufacturing, and energy.
| Beneficiary Sector | Share in Incoming FDI (2021) | Main Effects |
| Finance & Insurance | 31% | Credit stimulation, modernization |
| Manufacturing Industry | 24% | Job creation, technology transfer |
| Energy | 10% | Energy transition, sustainable development |
| Information & Communications | 8% | Digitalization, network improvement |
| Wholesale/Retail Trade | 8% | Domestic market expansion |
| Transport & Storage | 4% | Logistics modernization |
| Construction | 3% | Urban and road infrastructure |
Main Direct Effects on the Turkish Economy:
- Job creation: European investments have enabled the development of new factories and infrastructure, leading to a significant increase in jobs in the manufacturing sector and associated services.
- Technological modernization: The influx of European capital promotes the transfer of industrial know-how and technological upgrading of Turkish companies.
- Infrastructure strengthening: Many projects funded by the EU concern transport (roads, subways), telecommunications, and renewable energy.
Indirect Effects:
- Increase in overall productivity thanks to the diffusion of European innovations.
- Improvement of the local economic climate, attracting more international investors.
- Increase in EU-Turkey bilateral trade with intensified industrial exchanges.
Recent Data on European Investment in Turkey:
- FDI flows to Turkey reached $10.4 billion USD in 2023.
- The manufacturing industry accounted for 24% of FDI received in 2021.
- The total FDI stock amounted to nearly $164 billion USD at the end of 2022.
| Share in Incoming FDI Flows (%) | |
| Netherlands: 15 | |
| Germany: 6 | |
| Austria/Luxembourg/UK each ~6-7 |
The European share remains predominant among these major investors.
Impact on Turkish GDP:
Foreign investments have historically represented between 1% and over 3% of GDP, depending on the year. The sustained growth (+5-7% annually in recent years) is largely correlated with the dynamism brought by these external capitals.
Strengthening EU-Turkey Economic Relations
Investments facilitate:
- Increased integration into European logistics chains
- Intensified trade; particularly industrial exports to Europe
- A harmonized regulatory framework that further stabilizes the macroeconomic climate
List — Main Benefits for the Bilateral Relationship:
- Accelerated trade growth
- Increased financial stability
- Strategic sectoral cooperation (green industry, digitalization)
- Promotion of innovative joint ventures
Potential Challenges:
- Periodic geopolitical tensions likely to impact certain financial flows
- Excessive dependence on certain sectors or European countries exposing to external crises
- Ongoing need for institutional reform to guarantee an attractive environment facing emerging competitors
Future Prospects
Deepening the partnership aims for industrial upgrading (green industry), energy strengthening via renewables, and increasing digitalization. Regional political stability will remain decisive in maintaining this high level of attractiveness.
Good to know:
Investment from the European Union plays a crucial role in the Turkish economy, particularly in the infrastructure, manufacturing, and energy sectors, where it encourages modernization and innovation. These investments have a significant impact on Turkish economic growth, stimulating employment and technological development. For example, the establishment of new transport networks and the modernization of industrial facilities are directly linked to European capital, also facilitating trade with the EU. In 2022, foreign direct investment from the EU accounted for about 60% of the total, strengthening Turkey’s economic stability. However, despite these benefits, challenges remain, including political and economic tensions that could influence capital flows in the future. This economic collaboration remains crucial, offering new opportunities to strengthen bilateral ties and promote a stable commercial environment.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
