Turkey is in the global spotlight once again this week with its referendum on constitutional reform. Closer to home, it is Turkey’s economy and bilateral trade with Qatar that is the main subject of interest at the Turkey-Qatar Expo, currently taking place at the QNCC. Turkey is a natural trading partner for Qatar, as it is one of the major global economies, ranking 18th in terms of nominal GDP size standing at $857bn in 2016, and ranks 17th in terms of GDP by Purchasing Power Parity (PPP). Turkey has the most advanced industrial economy in the Islamic world, a favourable geographical location at the intersection of trade routes, a rapidly progressing investment environment, a long multicultural history, and a young, highly skilled workforce. Turkey’s economy managed to expand at the rate of 2.9% in 2016, higher than economists’ forecast of 2.2%.
Nevertheless, this compares with 6.1% growth during 2015, indicating the current economic slowdown. As a result of the government’s measures to increase domestic and foreign demand, and to prevent liquidity problems in the markets, the country’s annual GDP expanded by 3.5% in Q4-16, rebounding from 1.8% slump in Q3-16.
Trade between Turkey and Qatar is strong, increasing 20-fold in the last decade, with current bilateral trade volumes around $700mn. In 2016, Turkey exported $495mn worth of ships, food, electrical and electronic devices, machines and furniture to Qatar, and Turkey imported $271mn worth of oil, petroleum products, aluminium, and plastic products from Qatari manufacturers during the same year.
Qatari companies are increasingly investing in Turkey, mainly in the energy, banking, tourism and real estate sectors. Qatar’s investment in Turkey (both public and private sector investments) crossed over $20bn (QR72.8bn) in 2015, the second highest value of investments by any country in Turkey and Turkey ranks fourth in Qatar’s preferred investment destinations by country. The number of investment projects currently being undertaken by Turkish contractors in Qatar stands at over 120, with a combined value of $16bn, and Turkish companies are playing a significant role in Qatar’s infrastructure development, securing infrastructure-related contracts worth $2.5bn in 2015 alone.
The outlook for Turkey remains positive both for the economy in general and for Qatari investors, with the IMF projecting Turkey’s medium-term growth at around 3.5% in 2018 and 2019. The Turkish government has announced a series of measures to revive growth and support the currency such as state guarantees through a Credit Guarantee Fund for a proportion of corporate loans, with preferential terms for exporters and SMEs, capping interest rates on public sector deposits at public banks below current market rates for longer maturities, easing the conditions for banks to restructure non-performing loans, and temporary cuts in taxes to support employment and promote industrial investment.
Turkey wants to be in the world’s top ten economies by 2023 and I see no reason why this cannot happen. Turkey’s economic outlook has given my company, Commercial Bank, confidence in its decision to make a long-term investment in that country through its 100% acquisition of Alternatifbank (ABank) last year. We expect to make good returns on our investment because of Turkey’s long-term prospects. Despite current challenges, Turkey remains fundamentally a long-term growth story.