A Resurgent Türkiye Riding the Crest of an Export Boom Beckoning Innovative Trade Finance and De-risking Solutions
Türkiye is riding the crest of an export boom. It’s just over 40 years since then Turkish Undersecretary of Treasury Turgut Ozal, who went on to become Prime Minister and then President of the Republic, urged Turkish business to “Export or Die.” The rationale was to emphasise the importance of trade and manufacturing to an economy. With greater exports comes greater demand for export finance, credit insurance and guarantees. According to official Turkish trade data released in January 2024, the country’s exports increased for a third consecutive year reaching USD255.8 billion in 2023, up by 0.6% year-on-year from the USD254 billion in 2022. Türkiye exported to an impressive 70 countries in the year. ICIEC and the IsDB Group has enjoyed very close relations with Türkiye and its various agencies especially Turk EXIM, the state ECA, corporates and banks. The IsDB Group has an important regional hub in Istanbul, where ICIEC also has a dedicated regional office. Last year for instance the Hub hosted a ground-breaking three-day immersive Workshop to explore the pivotal role of information sharing and business intelligence in supporting trade and investment decisions in the member states of the Organization of Islamic Cooperation (OIC). Fatma Gamze Sarioglu, Senior Country Manager for Türkiye at ICIEC, delves into the foundational policies and contemporary dynamics shaping Türkiye’s trade and economic landscape and examines the historical context of modern trade initiatives, the current export landscape, strategic international collaborations, the impact of digital transformation on the trade sector, and the potential for ICIEC’s Sukuk Insurance Policy in upscaling issuances.
The roots of modern Turkish trade policies can be traced back to the reforms initiated by then Prime Minister Turgut Ozal in the 1980s, who went on to become President of the Republic between 1989 to 1993. Ozal’s economic liberalization and pro-market reforms catalyzed Türkiye’s integration into the global economy, setting the stage for the contemporary economic strategies that drive the nation today. These foundational policies have not only enhanced Türkiye’s economic resilience but also its adaptability to global trade dynamics.
Current Export Landscape and Economic Growth
Recent data on Türkiye’s exports illustrate a robust trajectory of growth, underscored by a diversification in both products and export destinations. This continuous expansion is a testament to Türkiye’s strategic positioning and its ability to adapt to changing global market demands. The diversity of export destinations highlights the country’s extensive trade network and its pivotal role in regional and global supply chains.
In February 2024, Türkiye’s leading exports included a diverse range of high-value products. Automobiles, including cars, tractors, trucks, and related parts, topped the list with exports valued at USD2.62 billion. This was followed by machinery, mechanical appliances, and their parts, which brought in USD1.8 billion. Electrical machinery and electronics also featured prominently, generating USD1.12 billion in export revenue.
Additionally, the exports of iron and steel contributed USD890 million to the economy, while precious stones, metals, and pearls accounted for USD874 million. These figures underscore the breadth and diversity of Türkiye’s export sector, highlighting its capability to compete in various high-demand markets globally.
The notable increase in Türkiye’s year-onyear exports in 2024 was primarily driven by significant gains in key markets and product categories. Exports to Iraq surged by USD329 million or 53.3%, while exports to the United Kingdom and the United States rose by USD204 million (25.2%) and USD198 million (20.4%), respectively. Among products, automobiles— including cars, tractors, trucks, and their parts—saw an increase of USD445 million or 20.5%. Iron and steel exports grew by USD281 million or 46.1%, and mineral fuels, oils, and their products rose by USD227 million or 35.2%.
In terms of destination, Türkiye’s largest export markets in 2024 were Germany (USD1.56 billion), the United States (USD1.17 billion), Italy (USD1.08 billion), the United Kingdom (USD1.02 billion), and Iraq (USD945 million). On the import side, Türkiye’s major sources included Russia (USD3.97 billion), China (USD3.21 billion), Germany (USD2.05 billion), the rest of the world (USD1.53 billion), and Italy (USD1.37 billion). This robust trade activity highlights Türkiye’s dynamic engagement in international trade, balancing a diverse range of export products with strategic import relations to support its economic growth.
ICIEC’s Strategic Engagement in Türkiye
The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) and the Islamic Development Bank (IsDB) Group have been instrumental in fostering trade and financial services in Türkiye through strategic partnerships with local entities like Turk EXIM Bank. These cooperative efforts are geared towards enhancing economic stability and facilitating sustainable development projects within the country.
Türkiye has established itself as a pivotal partner of ICIEC, fulfilling multiple roles as a shareholder, client, and collaborator. Since ICIEC began its operations in Türkiye, it has insured transactions totaling USD24.32 billion, underscoring the significant scale of its involvement in the Turkish market.
The establishment of the ICIEC office in Istanbul, Türkiye in 2015 marked a new era of enhanced cooperation, with exposure growing substantially. To date, ICIEC has provided insurance coverage for USD12.68 billion in exports from Türkiye and USD3.62 billion for the imports of strategic goods into the country.
Furthermore, the coverage extends to significant investments, insuring USD4.23 billion for foreign investments in Türkiye and USD3.77 billion for Turkish investments abroad. This support is critical not only for large enterprises but also for small and medium-sized enterprises (SMEs) through strategic partnerships with institutions like Turk Eximbank.
The impact of ICIEC’s local office in Türkiye is evident from the remarkable increase in the country’s exposure within ICIEC, which has escalated from USD217 million at the time of the office’s opening to USD1.45 billion today. This growth highlights the deepening relationship between Türkiye and ICIEC, and the significant role ICIEC plays in supporting the Turkish economy’s integration into global trade networks.
Turk Eximbank plays a crucial role as a strategic partner for ICIEC in Türkiye, effectively enhancing the support provided to the Turkish economy. The synergy between ICIEC and Turk Eximbank is manifest in several key areas:
- Reinsurance of Export Transactions: ICIEC provides reinsurance support for short to medium-term export transactions facilitated by Turk Eximbank, bolstering the latter’s capacity to back a larger volume and variety of export activities.
- Insurance of International Project Finance: ICIEC insures international project finance loans for Turkish contractors involved in significant projects in ICIEC member countries. Notable projects include the Douala Japoma Stadium in Cameroon, the Diamniadio Sports Arena, Cicad Business Hotel and Exhibition Center, and the Dakar Market and Truck Station – all in Senegal. This insurance coverage mitigates risks associated with overseas construction projects and enhances the competitiveness of Turkish contractors abroad.
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Support for International Borrowing: ICIEC supports Turk Eximbank’s international borrowing efforts by insuring the risks associated with these financial activities. This insurance provision enhances Turk Eximbank’s ability to secure funding on favorable terms, thereby extending its capacity to support larger and more impactful projects.
Together, these collaborative efforts not only strengthen Turk Eximbank’s role in supporting Türkiye’s economic expansion but also solidify ICIEC’s impact as a complementary force in fostering secure and sustainable international trade and investment activities for Türkiye.
Innovative Projects and Regional Contributions
Türkiye’s commitment to sustainable and innovative development is evident in projects such as the Yerköy-Kayseri High-Speed Railway and various wind farm initiatives. These projects not only bolster regional connectivity and energy sustainability but also contribute significantly to the country’s economic growth and environmental goals.
ICIEC in late 2023 participated in a landmark Green Railway transaction through issuing a EUR134.1 million insurance cover for the Yerköy-Kayseri High-Speed Railway project in Türkiye, which is being built between Yerköy YHT Station in Yerköy District of Yozgat and Kayseri YHT Station in the Kocasinan District of Kayseri and which will be integrated with the Ankara-Sivas high-speed railway when completed. The cover was for a Syndicated Financing Facility led by MUFG Securities EMEA plc and comprising six 6 banks including MUFG, Banco Santander, DZ Bank, Deutsche Bank, Societe Generale and ING Bank.
Ensuring that ICIEC’s support remains robust and effective is crucial within Türkiye’s rapidly evolving economic landscape. This involves continuous adaptation to the changing needs and growth trajectories of the Turkish economy to maintain alignment with national development goals and global market dynamics. It is imperative to proactively address global economic challenges that could influence Türkiye’s trade and investment activities. This includes navigating disruptions in international trade, fluctuations in global markets, and geopolitical tensions, all of which can impact Türkiye’s economic stability and growth prospects.
In addition, there is a growing necessity to respond to the potential impacts of climate change on investments in Türkiye. This involves supporting the transition to a green economy by fostering investments in sustainable infrastructure, renewable energy, and environmentally friendly technologies. Such strategic initiatives not only mitigate the adverse effects of climate change but also position Türkiye as a leader in sustainable development, ensuring long-term economic resilience and environmental stewardship.
