Economy
Türkiye sees post-war economic opportunities despite short-term risks
Türkiye expects to benefit from new regional dynamics after ongoing conflicts subside, Vice President Cevdet Yılmaz said on Tuesday, stressing that the country’s diversified supply structure and relative stability position it as a “safe haven” for investment.
“As a country with diversified supply systems, we do not have a supply shortage in any area. A new regional environment awaits us after the war. New dynamics will come into play, and we believe that as a country that maintains its stability and preserves its character as a safe haven, we have very significant opportunities and possibilities in this environment,” Yılmaz said.
He was speaking at a roundtable organized by the Union of Chambers and Commodity Exchanges of Türkiye (TOBB) and the U.S. Chamber of Commerce.
“Although these events may have negative impacts in the short term, they bring an important perspective and significant opportunities for Türkiye in the medium term,” said the vice president.
Oil and gas prices spiked following the start of joint U.S.-Israeli strikes on Iran on Feb. 28. Global supply chains are facing a historic upheaval as the war disrupts shipments through the Strait of Hormuz, the key transit point for Gulf oil and gas exports, as well as fertilizers.
Yılmaz said Türkiye has managed to shield itself from supply disruptions thanks to diversified sourcing, while taking measures to limit inflationary pressures caused by rising global prices.
“We are making efforts to contain the impact on inflation, even at the cost of taking on some fiscal burden,” he said.
At the same time, Yılmaz underscored Ankara’s dual approach of maintaining strong deterrence while advocating diplomacy, negotiations and cease-fires in regional conflicts.
“We support peace and diplomacy in every field and will continue to contribute to these processes,” he said.
Trade momentum continues, but imbalance widens
The meeting in Ankara, attended by senior representatives from the U.S. business community, focused on expanding bilateral trade and investment ties.
Yılmaz highlighted the strong trajectory of economic relations between Türkiye and the United States, noting that bilateral trade reached $39 billion in 2025, with the U.S. becoming one of Türkiye’s largest export markets.
Trade volume stood at $10.4 billion in the first quarter of 2026, signaling continued momentum toward the long-standing $100 billion trade target, he said. However, Yılmaz acknowledged that the trade balance has recently shifted against Türkiye, partly due to increased imports in energy and defense.
“To ensure a more sustainable and balanced structure, we aim to diversify trade and focus on high value-added sectors,” he added.
Beyond trade, mutual investments have also deepened. Direct U.S. investments in Türkiye totaled $16 billion between 2003 and 2025, with more than 2,300 U.S.-capital companies operating in the country across production, exports, employment and research and development.
Turkish companies, in turn, have invested more than $14 billion in the United States over the same period. Still, Yılmaz said Türkiye has significant untapped potential given the United States’ roughly $8 trillion global foreign direct investment stock.
Business leaders see strong investment potential
TOBB President Rifat Hisarcıklıoğlu echoed the positive outlook, saying the recent surge in trade and investment ties has created strong momentum toward the $100 billion target, though sustainability and balance remain key priorities.
He also pointed to shifting global supply chains, where trends such as near-shoring and friend-shoring are elevating Türkiye’s strategic importance due to its geography, industrial capacity and workforce.
Chobani founder Hamdi Ulukaya, who also heads the U.S.-Türkiye Business Council, said the current geopolitical environment has further underscored Türkiye’s role as a strategic investment destination.
“Türkiye has a young, dynamic business environment,” he said, adding that long-term investors could reap significant returns. “Investments in Türkiye will yield incredible results.”
Türkiye’s drone powerhouse on Tuesday called for deeper industrial partnerships among NATO members to accelerate the development and production of unmanned aerial vehicles (UAVs), arguing that cooperation would be more effective than duplicating capabilities across the alliance.
Speaking on the sidelines of the NATO summit in Ankara, Baykar CEO Haluk Bayraktar said the growing demand for drones in modern warfare requires shorter development cycles, faster production and greater manufacturing capacity.
Bayraktar added that while large defense companies such as Baykar can invest ahead of demand, startups require stronger market signals and financing to build manufacturing capacity.
“In our approach in Türkiye, for large-scale companies like ours, we do not even wait for demand to emerge to build capacity,” he said. “What we see on the ground shows that there is a major need for these technologies.”
However, when it comes to new ventures and startups, Bayraktar said it’s crucial for them to build this capacity themselves to meet the demand, which amounts to billions of dollars.
Baykar is the largest exporter of UAVs, he said, noting that the company has made major investments over the past 25 years in platforms ranging from unmanned combat aircraft to strategic-class systems.
It currently exports to 40 countries, including several NATO members, but wants to deepen cooperation within the alliance, according to the chief executive.
Bayraktar highlighted Baykar’s joint venture with Italy’s Leonardo, Leonardo Baykar Aerospace Systems (LBA Systems), as a model for future cooperation.
“It is much faster to cooperate instead of trying to invent everything from scratch or compete,” he said. “We have our platforms and systems. Leonardo has very strong payloads, radars, electronic systems and different mission payloads.
“It is necessary to create synergy by bringing the best together and combining these capabilities. The main point should be to combine these strengths instead of developing everything from zero.”
Bayraktar said the partnership is designed to develop new technologies jointly rather than transfer existing intellectual property.
“Technology sharing can of course happen, but the issue is not sharing intellectual property,” he said. “Under joint ventures, the aim is to create new intellectual property on the existing intellectual property of the parties and build on current capabilities.”
He said building such capabilities from scratch in another country could take decades, while cooperation could allow allies to start developing advanced technology immediately and gain an edge.
FPV capacity
Bayraktar said NATO includes both large and small countries, adding that sharing capabilities and creating synergy would be more efficient than trying to establish the same capacity everywhere from scratch.
He also said different production and cooperation models are needed depending on the type of UAV.
“UAVs are increasingly becoming part of our lives and are now among the main elements of war environments,” he said. “There is demand, there is necessity. What we see on the ground clearly shows that these technologies are greatly needed.”
He said UAVs include combat aircraft-class systems, strategic-class platforms and smaller drones, adding that every country should build capacity in first-person view (FPV) drones.
“These are almost like ammunition; every country needs a bullet manufacturer,” he said. “But for combat aircraft-class UAVs, alliances are needed to build this capability. I believe this is much more beneficial.”
Bayraktar said Türkiye’s defense industry has expanded dramatically over the past two decades, growing from 17 companies to more than 3,000, while annual defense exports have risen from $250 million in 2002 to more than $10 billion today.
“We now make in one week the defense exports that were $250 million at that time. Our weekly defense exports have reached around $450 million,” he added.
U.S. Secretary of Defense Pete Hegseth canceled a meeting that had been scheduled for Wednesday to discuss the possible sale of F-35 fighter jets to Türkiye with Israeli Prime Minister Benjamin Netanyahu, a report said.
Hegseth, who is attending the NATO summit in Türkiye along with U.S. President Donald Trump, had also been scheduled to meet Israeli Defense Minister Israel Katz on a trip that was also expected to focus on Iran, Reuters said, citing a source.
The visit would have come a day after Trump announced he would lift U.S. sanctions imposed on Ankara over its 2019 purchase of Russian air defense missiles, and he signaled a willingness to sell the NATO ally F-35 fighter jets.
Türkiye has long criticized Israeli genocidal operations in Gaza, Lebanon and Syria, and it has repeatedly accused Israel of trying to undermine the U.S.-Iran cease-fire deal mediated by Pakistan.
Trump said on Wednesday that the memorandum of understanding signed to end the conflict that the U.S. and Israel launched against Iran was “over” and that he didn’t want to engage with Tehran.
Netanyahu had on Monday urged the U.S. not to sell the jets to Türkiye, claiming it would “upset the power balance” in the region.
Türkiye dismissed his remarks, saying “Netanyahu and his partners in crime deliberately distort any criticism directed at them and seek to divert attention through a systematic propaganda effort.”
In 2019, the U.S. removed Türkiye from the F-35 program, where Ankara was also a production partner, following its purchase of the Russian S-400 air defense system.
Washington claimed the system would endanger the jets and is incompatible with NATO systems, while Ankara repeatedly said there is no conflict between the two and proposed a commission to study the issue.
Türkiye also said it fulfilled its obligations on the F-35s and that its suspension broke the rules. Ankara maintains that the jets could strengthen not only Türkiye but also NATO.
The International Monetary Fund (IMF) on Wednesday modestly downgraded its outlook for the world economy this year, citing the energy shock caused by the Iran war. But the fallout from the conflict is being partially offset by booming investment in artificial intelligence and other technologies.
The IMF now expects the global economy to expand by a sluggish 3% in 2026, down from 3.5% last year and from the 3.1% it had forecast for this year back in April, according to its latest World Economic Outlook report.
The fund expects worldwide growth to rebound to 3.4% next year.
Iran responded to U.S. and Israeli attacks Feb. 28 by shutting down the Strait of Hormuz, through which a fifth of the world’s crude oil and natural gas passes.
Energy prices soared, squeezing businesses and consumers. The IMF now expects oil prices to be up nearly 32% this year and for global consumer prices overall to increase 4.7% in 2026. That would be up from 4.1% in 2025 and would mean that two years of progress against inflation has stalled.
The IMF forecasts assume that the Strait of Hormuz reopens later this month – even though U.S. strikes on Iran resumed and President Donald Trump declared Wednesday that a cease-fire with Iran was over. They also assume that commerce through the strait returns to normal by next March.
Energy shock
“The world economy has weathered the shock from the war better than feared,” Petya Koeva Brooks, deputy director of the IMF’s research department, told reporters Wednesday.
The economic damage from the energy shock has been limited partly because countries could draw on existing oil stockpiles and because oil-exporting countries outside the Persian Gulf stepped up production.
Countries that produce and export their own energy and that benefit from AI investment are insulated from the war’s economic damage. Among them is the United States.
The IMF expects the U.S. economy – the world’s largest – to grow a solid 2.3% this year, up from 2.1% in 2025 and unchanged from the April forecast.
President Donald Trump’s 2025 tax cuts, big gains in productivity and a strong stock market are also giving the American economy a lift.
The 21 European countries that share the euro currency, hit hard by higher energy prices, are collectively forecast to grow just 0.9% this year, down from 1.4% in 2025.
China, the world’s No. 2 economy, is expected to expand 4.6% this year, down from 5% in 2026 but a bit faster than the IMF had expected in April.
Weighed down by higher energy prices and a property market collapse, the Chinese economy is getting offsetting help from public works spending, a surge in high-tech manufacturing and booming exports.
Türkiye outlook
In Türkiye, the IMF sees the economy growing by 2.9% in 2026, down from 3.4% projected in April.
That marks the second downward revision this year after it had already cut Türkiye’s forecast from 4.2% in its January outlook.
The IMF said it now expects Türkiye’s economy to grow 3.6% in 2027, slightly higher than the 3.5% forecast published in April.
The downgrade follows an earlier reduction in April, when the IMF cited weaker-than-expected economic activity and the impact of higher energy prices.
India is once again forecast to be the world’s fastest-growing major economy, advancing at a 6.4% clip, down from a sizzling 7.7% last year, on strong consumer spending.
Air Canada on Wednesday appointed a new CEO to succeed Michael Rousseau, who announced his retirement after coming under criticism over his failure to issue condolences both in English and French after a fatal airport disaster.
Canada’s national carrier said Anko Van der Werff, currently the chief executive at Scandinavian Airlines (SAS), would take charge by the end of January 2027.
Van der Werff was chosen following “a comprehensive global search,” Air Canada said.
“The search considered a number of performance criteria, including the ability to communicate in French,” it added.
The incoming boss, who will also serve as president and sit on Air Canada’s board, said he was “mindful of the importance of serving Canadians in both official languages.”
Rousseau had sparked controversy by issuing an English-only video message to express condolences after a deadly collision late on March 22 between an Air Canada jet and a fire truck at New York’s LaGuardia Airport.
Canada has two official languages – English and French – and one of the pilots killed in the accident was from French-speaking Quebec.
Rousseau had issued an apology over his English-only message, regretting that he couldn’t express himself in French “despite many lessons over several years.”
Prime Minister Mark Carney – whose occasionally halting French was discussed when he entered politics last year – also said at the time that he was “disappointed” by Rousseau’s unilingual message.
Air Canada is the country’s largest airline and is headquartered in Montreal, Quebec – Canada’s traditionally French-speaking province. The company is required to offer services in both languages.
Work is continuing with Türkiye and Italy regarding the SAMP-T air defense system, French President Emmanuel Macron said on Wednesday.
“We have work underway on a Franco-Italian basis, along with Turkey, which is technical work and which is continuing,” said Macron at the NATO summit in Ankara.
His remarks followed reports suggesting France is willing to consider a possible sale of SAMP-T to Türkiye following years of opposition, clearing the way for more substantive talks with Ankara.
The shift in position followed talks between French President Emmanuel Macron and Italian Prime Minister Giorgia Meloni during a summit on June 25.
Earlier on Wednesday, Macron met with Turkish President Recep Tayyip Erdoğan for talks on bilateral ties and regional and global developments, Türkiye’s Communications Directorate said.
During the meeting, Erdoğan said the time had come for Türkiye and France to raise their mutual trade targets, adding that Ankara would continue efforts to advance cooperation “in every field.”
Erdoğan also stressed the importance of strengthening NATO’s European pillar to preserve the “Transatlantic Bond” among allies, saying this could be achieved “without eroding our alliance ties and without causing unnecessary duplication.”
He added that Türkiye would support the EU’s defense initiatives on the basis of those principles.
Last week, Defense Minister Yaşar Güler said Türkiye was “evaluating all options” to boost its air defenses, including the potential purchase of Patriot systems from Washington or SAMP-T systems.
Güler said Ankara remained open to cooperation involving technology transfer and joint production. Technical and political talks with the relevant countries are taking place “from time to time,” he added.
Türkiye, France and Italy launched cooperation on a possible long-range air-defense program in 2017 to 2018, including studies into co-development and co-production.
However, the project stalled as ties between Ankara and Paris deteriorated over Syria, Libya and disputes in the Eastern Mediterranean involving Greece and Greek Cyprus.
The SAMP-T, also known as Mamba, is produced by the Franco-Italian Eurosam consortium, bringing together MBDA France, MBDA Italy and Thales.
The system can track dozens of targets simultaneously, intercept multiple threats at once and is the only European-made system that claims to be able to intercept ballistic missiles.
Often described as Europe’s closest counterpart to the U.S. Patriot system, it divides analysts on its efficiency, who point to its lack of combat use over the years.
Türkiye has NATO’s second-largest army and has for years been ramping up investments as it seeks to have its own fully fledged missile defenses. It is meanwhile producing components for its integrated, multilayered “Steel Dome” air defense system.
Beyond Paris and Rome, the SAMP-T has only been exported to Singapore, although it has been transferred to Ukraine in recent years and France deployed it to help the United Arab Emirates (UAE) defend itself against Iranian missile attacks this year.
Italy sent the system to Türkiye in mid-June as part of NATO defense planning.
Any deal would likely center around the new generation of the system, which is being rolled out to the French and Italian militaries.
While Italy has long been in favor of sharing the SAMP-T with Türkiye to deepen defense industry cooperation, Turkish officials have for years privately and publicly regarded France as the principal political obstacle to the program.
Momentum has returned over the past year as Ankara has intensified efforts to strengthen its missile defense capabilities amid regional instability and NATO allies have reassessed defense cooperation and capability needs.
U.S. President Donald Trump on Wednesday directed an immediate suspension of all trade with NATO ally Spain, escalating strains tied to defense spending and the Iran war despite European Union rules requiring trade negotiations to be conducted as a single bloc.
During a NATO summit in Ankara, which European leaders had hoped would put a lid on rifts within the military alliance, Trump instead reignited the dispute with Spain, calling Madrid a “terrible partner.”
He also irked another NATO ally Denmark by reiterating that his country should control Greenland. Denmark promised to defend every inch of its territory.
It was the second time Trump has instructed Treasury Secretary Scott Bessent to halt commerce with Spain over its refusal to commit to NATO’s new defense spending target of 5% of GDP. However, after his first such promise in March, trade between the two countries continued normally.
“Spain doesn’t agree to anything, and you shouldn’t carry them,” Trump told NATO Secretary-General Mark Rutte, who later tried to soothe the tension by saying that Spain “made a huge step last year” raising its spending to 2%, although he added that “there are still issues we have to solve.”
“I don’t want to do any trade with them, alright?” Trump said, turning to Bessent, who replied: “Yes, sir.” Trump then added, “Take it immediately. Don’t even talk to them. They’re hopeless. They’re bad people… They make so much money with us, and we’re going to see that they make a lot less.”
EU vows to protect member states’ interests
The office of Spanish Prime Minister Pedro Sanchez, who leads a minority leftist government, said in a statement it was treating Trump’s statements as “business as usual” and did not intend to change the “excellent” relations it enjoyed with Washington.
It pointed out that Spain had a trade deficit with the U.S. and that economic ties were forged by private companies rather than governments, adding that as part of the customs and trade union, individual EU members could not be singled out.
Later on Wednesday, the EU said it will “always ensure” the interests of member states are “fully protected.”
“We expect the U.S. to honor its commitments under that joint statement as we have honored ours,” EU trade spokesperson Olof Gill said, referring to a trade pact signed last year between Brussels and Washington.
“The Commission will always ensure that the interests of the European Union and all our member states are fully protected. We will continue to advocate for stable, predictable and mutually beneficial trans-Atlantic trade for the benefit of all,” Gill added.
Trump has repeatedly expressed frustration with Spain after Sanchez, a Socialist, refused to let the U.S. use its airspace or bases on its territory for the Iran war. Washington jointly operates with Madrid two key military bases in southern Spain for naval and air operations.
Spain is the world’s largest olive oil exporter and also sells auto parts, steel, and chemicals to the United States, although analysts consider it to be less vulnerable to Trump’s threats of economic punishment than other European economies.
Trump said he would air his grievances with fellow NATO allies at the leaders’ consultations at the summit on Wednesday, including his long-standing ambitions to acquire Greenland, adding that he was “very upset” with NATO allies over unequal defense spending and a lack of support on Iran.
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