Machinery manufacturing continues to be one of the key growth drivers of the Turkish economy. This sector plays a crucial role in the development of Türkiye's greater manufacturing industry due in no small part to its capability to produce intermediate goods and to provide inputs to key sectors such as chemicals, construction, automotive, energy, textiles, agriculture, and mining. The machinery manufacturing sector in Türkiye is known for being R&D intensive -- Türkiye graduates over 39,000 engineers every year in mechanical fields -- and for creating high value.

Türkiye's competitiveness in the machinery sector is driven by favorable input costs and strong enablers. Input costs include competitive labor cost, an affordable and reliable energy supply, and logistical advantages based on the geostrategic location of Türkiye; enablers, on the other hand, include a skilled workforce, generous investment incentives, an innovation-oriented infrastructure, and a strong supply base and domestic clusters.

Here are some essential facts and figures about the Turkish machinery sector:

• The Turkish machinery sector more than quadrupled its revenues to reach USD 47 billion and doubled its workforce to hit 300,000 in 2022.


• While global exports doubled, Türkiye's exports have increased tenfold in the past 20 years and reached USD 21 billion in 2023.


• The export/import ratio of the industry has increased from 30 percent to 70 percent since 2003, indicating an ever-growing market with less dependency on im​ports.


• 4th largest export industry of Türkiye, accounting for a 10 percent share in the country's total exports, machinery products are shipped to more than 200 countries. 60 percent of total machinery product exports are shipped to the USA and EU countries, mostly to Germany, UK, France, and Italy. Total imports of the machinery sector surpassed USD 38 billion in 2022, endorsing the strong demand from the domestic market.


• Türkiye's agricultural machinery market reached USD 3.6 billion in 2022.


• Türkiye's construction machinery market reached 2 billion in 2022.


• Türkiye's HVAC sector stands out as a strong industrial base with USD 4.7 billion total export in value. It also functions as Europe's manufacturing base for panel radiators, boilers, and air handling units (AHUs).


• Türkiye's market for lifting and handling equipment reached USD 2.9 billion in 2022.​

The foundation of Türkiye’s automotive industry dates back to the early 1960s. During a period of rapid industrialization and progress, this key sector transformed itself from assembly-based partnerships to a full-fledged industry with design capability and massive production capacity. Since 2003, original equipment manufacturers (OEM) have invested over USD 18 billion in their operations in Türkiye. These investments significantly expanded their manufacturing capabilities, which in turn led Türkiye to become an important part of the global value chain of international OEMs. Meeting and exceeding international quality and safety standards, today’s Turkish automotive industry is highly efficient and competitive thanks to value-added production.

As part of its commitment to transforming its automotive industry, which has historically been a key economic driver in integrating the Turkish economy with the global value chain, and to its vision of making Türkiye an economic powerhouse, Türkiye has introduced its own locally-developed born-electric car built upon strength stemming from the country's long-standing know-how in the area.

Accordingly, Türkiye's Automobile Joint Venture Group, known as Togg, will produce five different models on a joint platform with fully-owned intellectual and industrial property rights by 2030. The first SUV model of Togg has been rolled out in April 2023.

• Leveraging a competitive and highly-skilled workforce combined with a dynamic local market and favorable geographical location, the vehicle production of 8 global, and 5 local OEMs in Türkiye has increased by almost five times from 300,000s in 2002 to over 1.4 million units in 2023. This represents a compound annual growth rate (CAGR) of around 7 percent during that period.


• Significant growth posted by Türkiye’s automotive sector led to the country’s becoming the 12th largest automotive manufacturer in the world and 3rd largest in Europe by the end of 2023.


• Türkiye has already become a center of excellence, particularly with respect to the production of commercial vehicles. By the end of 2023, Türkiye was the number one producer of commercial vehicles (CVs) in Europe.


• Proven as a production hub of excellence, the Turkish automotive industry is now aiming at improving its R&D, design, and branding capabilities. As of 2023, 162 R&D and design centers belonging to automotive manufacturers and suppliers are operational in Türkiye.


• Notable examples of global brands with product development, design, and engineering activities in Türkiye include Ford, Fiat, Daimler, AVL, and FEV. Ford Otosan’s R&D center is one of Ford’s three largest global R&D centers, while Fiat’s R&D center in Bursa is the Italian company’s only center serving the European market outside its home country. Meanwhile, Daimler’s R&D center in Istanbul complements the German company’s truck and bus manufacturing operations in Türkiye. AVL Türkiye, which opene​d up its 2nd R&D center in Türkiye, develops autonomous and hybrid vehicle technologies.


• Türkiye offers a supportive environment on the supply chain side. There are around 1,100 component suppliers supporting the production of OEMs. With the parts going directly to the production lines of vehicle manufacturers, the localization rate of OEMs varies between 50 and 70 percent.


• Türkiye is home to many global suppliers. There are more than 250 global suppliers that use Türkiye as a production base, with 30 of them ranking among the 100 largest global suppliers.


• Auto manufacturers increasingly choose Türkiye as a production base for their export sales. This is evidenced by the fact that around 70 percent of vehicle production in Türkiye was destined for international markets in 2023. Türkiye exported more than 1 million vehicles to international markets in the same year. In addition, Türkiye is the second bigger vehicle exporter to European markets after UK in 2023.​

Türkiye's developing economy offers lucrative investment opportunities in infrastructure across a wide variety of sectors including transportation, healthcare, and energy. Between 1986 and 2023, contracts were signed for 270 Public-Private Sector Partnership (PPP) projects with a total contract value of 204 billion USD. The fact that more than half of these projects have reached financial closure in the last 10 years demonstrates Türkiye's increasing experience in this field in the best way.

Türkiye has solid rationales for investment in infrastructure:

• The Turkish economy exhibited a robust annual GDP growth rate of 5.4 percent during 2003-2023.


• Türkiye’s 85.4 million strong population is growing by an additional 1 million every year; this is coupled with a rapid urbanization process that has resulted in more than 24 urban centers with populations over 1 million, and of which 10 of those ​24 have populations of over 2 million.


• Türkiye’s growing international trade volume and strategic location compel the country to develop its infrastructure.


• As a bridge between the East and the West, Türkiye leads the Middle Corridor at the heart of the Belt and Road Initiative (BRI).


• Hosting more than 1 million foreign patients a year, Türkiye has significantly improved the quality of its healthcare services and will continue to invest in healthcare infrastructure to catch up with OECD.


• From transportation to healthcare and to energy, ample opportunities from mega to micro projects are available in the pipeline.


• Türkiye has favorable investment legislation for PPP investments that may be realized through various models, such as build-operate, build-operate-transfer, transfer of operational rights, etc. ​


• Türkiye’s government provides various forms of support and incentives to accelerate the project development. ​


• Türkiye’s investment climate is further strengthened by domestic and international laws that protect investments and provide international arbitration.​


• Türkiye's macroeconomic policies, investments, and more importantly, strong public finance management, support PPP investments that require guaranteed purchase.​

Demand for energy and natural resources has been increasing due to the economic and population growth in Türkiye. It has posted the fastest growth in the OECD, with an annual growth rate of 5.5 percent since 2002. Since then, Türkiye’s primary energy supply has shown a two-fold increase​. Türkiye’s growing economic performance has also been reflected on the country’s electricity generation infrastructure given the dramatic rise in the total installed capacity from 31.8 GW to 95.9 GW. To satisfy the increasing needs of the country, the current capacity is expected to reach 110 GW by 2023 through further investments to be commissioned by the private sector as underlined in the 11th Development Plan for 2019-2023.

The success of a privatization and liberalization program going on since 2002 has handed over all of the power distribution assets and 78 percent of the power generation assets to the private sector, creating revenues of USD 23 billion for the Treasury. In the same period, about USD 100 billion worth new public and private investments were completed in power generation, transmission, and distribution assets. Under the strategy to increase liberalization and competition in the market, the Energy Exchange Istanbul (EXIST), which is responsible for managing and operating energy markets, including power and gas commodities, was established in 2013.

Türkiye is a net energy importer country. The import dependence has been the main driving force behind the formulation and implementation of new policies and investment models to commission local and renewable energy resources. Türkiye has a substantial amount of renewable energy potential, and utilization of this potential has been on the rise over the last decade. As of end-2020, hydro, wind, and solar resources constitute the vast majority of the country’s renewable energy resources, accounting respectively for 30.9 GW, 8.8 GW, and 6.7 GW of the total installed capacity.

Türkiye also has a substantial amount of coal reserves, totaling 17.3 billion tons and composed of mostly lignite. It is also worth mentioning that Türkiye’s natural gas sector has been steadily improving. In order to increase security of supply and seasonal gas send-out capacity, Türkiye has commissioned two Floating Storage Regasification Unit (FSRU) terminals in 2018 and opened up the first phase of the Tuz Golu (Salt Lake) Natural Gas Storage Facility. Another goal of these investments is to expand Türkiye’s gas storage capacity to 11 bcm by 2023, up from its current capacity of 4 bcm.

Global sales of chemicals more than quadrupled over two past decades, driven in large part by emerging economies that accounted for more than 80 percent of new chemical production capacity.

Chemical sales in Türkiye have closely followed the global trend. Türkiye is an attractive investment location for chemical companies with its robust market growth fueled by end-user markets and its competitive production costs. Türkiye is also a regional production, management, and export hub for leading brands in the chemicals industry. Chemical giants such as BASF, Henkel, Bayer, Evonik, Air Liquide, Linde, Ravago, P&G, PPG, and Dow have been producing in Türkiye for decades and have continued to grow over the years.

As part of the urban transformation project in Türkiye, it is estimated that around 6.5 million residential units nationwide will be demolished and rebuilt over the next 20 years. Thus, Türkiye's construction industry, which is valued at USD 60 billion, is one of the fastest growing end-user markets for the chemicals industry in Türkiye.

Another promising area in Türkiye's chemicals industry is the plastics sector, which accounts for almost 3 percent of global plastics production.

The significant gap between the capacity and the consumption of petrochemical products offers ample opportunities for local and foreign investors. There are also lucrative opportunities in Türkiye’s surroundings that investors can tap into by utilizing the country’s strategic location and top-notch infrastructure.

The combination of a growing economy, a large domestic market, advanced infrastructure, a skilled and competitive workforce, and investor-friendly legislation ensure that manufacturers in Türkiye’s chemicals sector stand to reap long-term returns from investing in one of the most promising emerging nations in the world.

The healthcare sector and its related industries are considered to be of strategic importance in Türkiye. This is especially true when taking into consideration these industries’ social and economic impacts. Türkiye affirmed its commitment to healthcare reforms with the implementation of the Healthcare Transformation Program introduced in 2004 by the Ministry of Health. These reforms marked a significant improvement in Türkiye’s healthcare system, and they have been backed by investments in R&D and innovation in the healthcare sector.

In 2022, the value of the global pharmaceutical market reached USD 1.5 trillion, with Türkiye ranking at the 21st spot.

Some key facts and figures in the Turkish pharmaceuticals sector are as follows:

• In 2022, the Turkish pharmaceuticals market grew in value by 78.8 percent, reaching TRY 109.8 billion. Unit sales protected the line and hit 2.8 billion in the same year.
  
  
• Around 500 companies operate in the industry. As of the end of 2022, there are 103 drug and 13 raw material production facilities that meet the highest international standards.
  
  
• Among the 103 manufacturing facilities, 23 are owned by multinational companies.
  
  
• Among the 13 raw material production facilities, 3 are owned by multinational companies.
  
  
• The pharmaceutical industry employs over 45,000 staff and provides over 12,000 products.
  
  
• Biotechnological products constituted 18.3 percent of prescription products with a value of TRY 20.1 billion across 40 million units in 2021.
  
  
• The reference biotechnological pharmaceutical market grew by75 percent to a total of TRY 17.5 billion in 2022.
  
  
• The biosimilar drugs market grew by 63.1 percent to reach TRY 2.6 billion.​



• Pharmaceutical exports, which stood at USD 995 million in 2017, surged by 121 percent to hit USD 2.2 billion in 2023.
  
  
• Turkish pharmaceutical manufacturers are exporting to more than 170 countries, including the EU, MENA, and CIS countries.
  
  
• Regulations in the sector are in line with EU directives.

Some key facts and figures in the Turkish medical devices sector include:

• The Turkish medical devices market size is USD 2.9 billion in 2022.
  
  
• The market is expected to grow by 57 percent in local currency terms in total between 2022-2027.
  
  
• The healthcare campus projects will cater to increasing demand in the sector over the next several years.
  
  
• The growing medical tourism sector, in which the number of tourists rose to 1.4 million in 2023, and the total contribution to the Turkish economy was USD 2.3 billion.​
  
  
• Medical device regulations are in line with EU directives.