Turkey

Turkey’s powerhouse automotive industry is expected to experience a downturn in 2014, as higher interest rates and a slowing economy cause domestic buyers to hit the brakes on spending. The outlook is likely to remain flat for the rest of the year, though solid exports may help offset some of the localised cooling in the market.

As it looks to have its 18-year-old Customs union with Europe rewritten in mid-2014, Turkey says it is at a disadvantage under some terms of the agreement, in particular through trade pacts between the EU and third parties.

The flow of foreign direct investment into Turkey picked up in the second half of 2013, and while the full-year figures were down, it appears external factors, rather than any cooling of the local economy, were the primary cause.

Recent acquisitions of Turkish agribusiness interests by Gulf investors have highlighted the sector’s opportunities for expansion in the wider region. However, further development of the industry faces challenges, including the need for additional farm labourers.

Widespread drought is affecting Turkey’s agriculture sector, with the 2014 wheat harvest at particular risk of underperforming and warnings of crop failures in a number of grain-growing regions.

Additional restrictions on consumer lending and higher interest rates could mean a slowdown in growth for Turkey’s banks, although the sector should have the resilience to ride out any shockwaves.