Economy
Turkish ship, yacht exports hit $1.5B in H1, sector eyes new record
The Turkish ship and yacht industry registered $1.5 billion (TL 70.48 billion) in exports in the first half of the year, and the sector leaders aim to catch a new record by the end of the year, according to a report on Sunday.
Mustafa Talha Pepe, chairperson of the Board of the Ship, Yacht and Services Exporters’ Association (GYHIB), said the Turkish ship, yacht and services sector generated $1.5 billion in exports in the first six months of the year, adding that the industry aims to set a new record by reaching between $2.5 billion and $3 billion in exports by year-end.
Speaking to Anadolu Agency (AA), Pepe said the increase in exports was largely driven by deliveries of fishing vessels, special-purpose ships and tugboats to Northern European countries, underscoring that the sector continues to strengthen its competitiveness in international markets.
“We reached $1.5 billion in exports in the first half of the year. By the end of this year, we aim to break a new record and achieve exports of between $2.5 billion and $3 billion,” he said.
Pepe noted that much of the first-half performance stemmed from deliveries under contracts signed two to three years ago, adding that the country’s shipbuilding industry has made significant progress in recent years.
He said GYHIB is actively promoting the sector abroad by participating in shipbuilding and yacht exhibitions across Europe and organizing one-on-one business meetings.
“First and foremost, wherever we see potential, we fly our country’s flag before our association’s flag, and we are proud of that,” Pepe said. “We regularly attend trade fairs across Europe for both ships and yachts, and we do our best to promote both our industry and our country.”
He said the association visited Greece last month and is expected to participate in trade fairs in Germany and France in September and October.
“We try to represent both our country and our sector wherever opportunities arise. Borders and distances are not important to us, as long as there is an opportunity,” he added.
Pepe also pointed to a slight decline in shipyards’ order books compared to previous years, stressing that continued incentives and support mechanisms are essential for the sector to further expand its potential.
High value-added industry
Describing shipbuilding and yacht manufacturing as one of Türkiye’s highest value-added export industries, Pepe said the sector generates an average export value of around $25 per kilogram, making it one of the country’s most valuable export segments.
“I believe our industry is among those with the highest added value and makes a significant contribution to the overall value of Türkiye’s exports,” he said.
Pepe also suggested that export growth has had a positive impact on employment, domestic suppliers and local manufacturing.
Local production strengthens competitiveness
Moreover, he emphasized that increasing the share of locally produced components has significantly boosted the industry’s export performance.
He said the COVID-19 pandemic exposed the vulnerabilities of globally interconnected supply chains, encouraging Turkish shipbuilders to rely more heavily on domestic suppliers.
“In shipbuilding and yacht construction, we are trying to show customers that by maximizing domestic supplier inputs and reducing dependence on imported materials, we can ensure a smoother and more reliable delivery process,” he said.
“As a result, the contribution of domestic suppliers and local production is extremely important and is becoming more valuable every day. End users also appreciate having this option,” he added.
Green shipbuilding gains momentum
Furthermore, Pepe said the industry has rapidly adapted to the transition toward sustainable shipping, noting that more than half of the vessels currently built in Turkish shipyards are equipped with electric or LNG-powered environmentally friendly technologies.
He added that production of green vessels for Northern European markets has increased as Turkish shipbuilders closely follow the global transformation of the maritime industry and adjust their production accordingly.
Looking ahead, Pepe said the industry’s top priority is to preserve the market share it has built in Europe over the years.
He also underscored that continued support for the sector will be crucial to maintaining Türkiye’s strong position in fishing vessels, ferries, tugboats and special-purpose ships.
Türkiye’s exports to 18 countries classified under its “Distant Countries Strategy” surged by 12.2% on an annual basis to hit $14.3 billion (TL 671.88 billion) in the first half of the year, according to a report on Sunday.
The countries on the list include major trading partners such as the U.S., but also countries including China, Japan, Pakistan, Canada, India and Australia.
The positive momentum in the shipments to distant markets in the January-June period came despite global tensions and the outbreak of the U.S.-Israel-Iran war, bolstering the overall picture for Turkish exports.
The Russia-Ukraine war, which has now stretched nearly 4.5 years, Israel’s attacks on Palestine and Lebanon to the south, and most recently, the Iran war, have negatively affected the global economy and trade corridors.
Combined with the economic slowdown in Europe, these developments have prompted Turkish exporters to diversify their export markets.
Against this backdrop, the importance of the Trade Ministry’s Distant Countries Strategy, launched to increase Türkiye’s share of imports from 18 countries that together account for more than half of the global economy, has grown further.
Accordingly, Turkish exporters have intensified engagement with these markets under the strategy, and these efforts have been reflected in export figures.
Exports to 18 countries exceed $14 billion
As such, data compiled by Anadolu Agency (AA) from the Türkiye Exporters Assembly (TIM) reveals that exports to the 18 target countries increased 12.2% year-on-year to $14.35 billion, up from $12.78 billion in the same period last year.
The United States ranked first, with exports totaling $6.97 billion, accounting for nearly half, or 48%, of Türkiye’s total exports to the 18 target countries.
The U.S. was followed by China with $1.81 billion, Mexico at $641.7 million, Canada at $640.2 million and India at $580.4 million.
Moreover, Nigeria recorded the strongest export growth in the first half of the year, with shipments surging 62.4% year-on-year.
It was followed by Indonesia (57.1%), South Africa (36%), China (32.7%) and Mexico (17.6%), respectively.
Chemicals led exports to the U.S.
Breaking down exports to the U.S. during the January-June period, the chemicals and chemical products sector ranked first with $725.4 million in exports. It was closely followed by electrical and electronics, whose shipment volume totaled $679.2 million and the automotive industry, at $607.2 million.
For exports to China, mining products dominated with $1 billion, followed by chemicals and chemical products ($362.4 million) and textiles and raw materials ($87.8 million).
In Mexico, Türkiye’s third-largest export destination among the target countries, jewelry ranked first with $178.2 million, followed by the automotive industry ($114 million) and steel ($73.1 million).
Launched by the Trade Ministry in 2022, the Distant Countries Strategy covers the U.S., Australia, Brazil, China, Indonesia, the Philippines, South Africa, South Korea, India, Japan, Canada, Malaysia, Mexico, Nigeria, Pakistan, Chile, the island of Taiwan and Vietnam.
China’s economic growth is predicted to have slowed down in the second quarter of the year, according to a recent survey, although strong exports tied to a global artificial intelligence boom helped offset trade frictions and high energy prices amid the Middle East war.
The world’s second-largest economy is increasingly reliant on foreign trade to expand as a prolonged property-sector slump and weak consumer demand continue to pose problems.
The U.S.-Israeli war on Iran threatened growth as it choked off shipping through the Strait of Hormuz, through which a fifth of global oil and natural gas normally passes, and sparked fears of a downturn that would have hit demand for Chinese exports.
But data due on Wednesday is expected to show the country’s economy expanded 4.5% year-over-year in April-July, according to the median forecast of an Agence France-Presse (AFP) survey of experts.
That would represent a significant slowdown from the five percent recorded in the previous quarter but still leave the economy on track to reach the government’s annual target of 4.5%-5.0%.
Dan Wang, a director on Eurasia Group’s China team and one of 11 analysts surveyed by AFP, said the economy had stood up well to energy and supply chain disruptions from the Iran war.
But he added that “weaker global demand has a visible negative impact on lower-end consumer goods and small exporters.”
High-tech sectors thrived, however, with industries related to artificial intelligence and renewable energy seeing “stellar performance,” Wang said.
AI boom
China weathered a punishing trade war launched by U.S. President Donald Trump last year to emerge with an eye-watering $1.2 trillion trade surplus in 2025, the largest on record.
Exports have surged again in the first half of this year, driven by demand for AI-related tech and automobiles, with overseas shipments up 19.4% year-over-year in May.
In the second quarter, “external demand continued to outperform despite tariffs and geopolitical uncertainty,” Sheana Yue, senior economist at Oxford Economics, told AFP.
She said this reflected “China’s improving competitiveness, continued gains in global market share, and its ability to rapidly scale production in higher value-added manufacturing sectors.”
But surging exports are compensating for weak domestic demand and subdued business and household sentiment that “appears to have been further weighed down by uncertainty stemming from the Iran conflict,” Yue said.
Despite the government rolling out billions of yuan in special bonds since 2024 to support trade-in programs for consumer goods and subsidies, retail sales fell for the first time in three years in May, while fixed-asset investment has also slumped, according to official data.
The debt crisis in China’s massive property sector, which began in 2020 and has spooked consumers, has also dragged on.
Once a key store of wealth, home prices across the country have stagnated, dissuading would-be buyers from investing.
“With still no signals that the real estate crisis is coming to an end, it is hard to see a recovery in consumption,” said Rabobank’s Teeuwe Mevissen.
Trade frictions
Analysts expect new measures will be needed to support growth in the second half of the year, especially if the AI export wave subsides.
Policymakers had focused on debt resolution and reform in the second quarter, but would likely pivot to “re-prioritize growth, with potential policies to step up investment and support services and employment,” according to Guo Shan at Hutong Research.
Continued trade frictions with the U.S. and the European Union, China’s second-largest trading partner, could threaten Beijing’s exports and require new efforts to rebalance the economy.
A U.S. trade truce, agreed last year, is due to expire in November, while the EU is considering measures to protect domestic industries from what it considers unfair competition from China.
With domestic demand subdued, Chinese manufacturers such as electric vehicle makers have pinned their hopes on overseas expansion to boost profits outside the country’s ultra-competitive market.
“Ultimately, China’s ability to sustain growth will depend on a meaningful recovery in household consumption and a revival in private-sector confidence,” Sarah Tan of Moody’s Analytics said.
The United States has completed a key procedural stage in the planned sale of F110 engines sought to be used in Türkiye’s flagship homegrown fifth-generation fighter jet after the congressional review period expired without objection.
With the Kaan warplane, Ankara seeks to join the exclusive club of nations producing fifth-generation combat aircraft, which notably includes the United States, China and Russia.
The U.S. State Department formally notified Congress of the proposed sale on June 24, triggering a 15-day review period that applies to arms sales to NATO member states.
During that period, nine members of Congress introduced a joint resolution seeking to halt the sale of certain defense equipment, services, and related support to Türkiye.
However, the resolution was not brought to the floor of either the House or the Senate before the review period expired.
The notified sale covers the integration, assembly, external modification, certification, testing, defense services, and technical data transfer related to the F110-GE-129E/F engines that will power the Kaan jet.
Türkiye has worked on the warplane for a decade. The jet was first publicly unveiled in 2023 before it performed its maiden test flight in early 2024. Its serial production is expected to begin in 2028.
Kaan is sought to replace the Air Forces Command’s aging F-16 fleet, which is planned to be phased out starting in the 2030s.
The F110s have been intended for the first batch of the warplanes. Later stages are planned to include the indigenous power unit, the TF35000.
Last month, U.S. President Donald Trump promised to make Turkish President Recep Tayyip Erdogan “very happy” when asked about Türkiye looking to secure F110s and regaining access to the F-35 fighter jet program.
Speaking alongside Erdoğan before this week’s NATO summit, Trump said Washington would lift sanctions on Türkiye and signaled a willingness to sell the F-35 jets.
The move would be the biggest gesture yet from Trump to Erdoğan, whom he regularly praises and sees as a close ally. The two countries have enjoyed warmer ties since Trump returned to office last year.
Erdoğan said he was confident Trump would resolve the issue and end the dispute.
In 2019, the U.S. removed Türkiye from the F-35 program, where Ankara was also a production partner, following its purchase of the S-400 systems. It later also imposed sanctions on its NATO ally.
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 maintained that it fulfilled its obligations on the F-35 project, arguing that its suspension broke program rules and that the jets would strengthen both Turkish and NATO security.
One of Türkiye’s leading telecoms and tech companies, Turkcell, sees artificial intelligence as no longer just a race over models but increasingly a competition over infrastructure, its CEO Ali Taha Koç said.
Koç was speaking at the AI for Good Global Summit organized by the International Telecommunication Union (ITU), where he outlined Turkcell’s investments across five key layers of the AI ecosystem.
Koç said the future of artificial intelligence would depend on countries and companies’ ability to build strong and independent digital infrastructure.
“Artificial intelligence is no longer a matter of models; it is a matter of infrastructure. Whoever controls the infrastructure will shape the future,” he said. “If AI is the key to a strong digital future, the future of AI depends on robust and independent infrastructure.”
Technology, mobile communications and AI leaders gathered in Geneva, Switzerland, from Tuesday through Friday for the U.N.-backed ITU summit, where Koç participated in two separate sessions on the transformation of the technology sector.
Koç said Turkcell aims to become a regional technology provider capable of supporting Türkiye’s digital transformation, highlighting the company’s investments in the core layers underpinning AI development.
5 fundamental layers
Koç said AI infrastructure is built on five main layers: energy, chips and computing power, data centres and cloud infrastructure, models, and applications.
“The decisive factor in the AI era is no longer just the size of models or processing capacity. Building an AI-based infrastructure that can move intelligence from data centres into the real world is becoming increasingly critical,” he said.
Koç added that telecommunications networks serve as the main platform connecting all these layers, enabling AI to improve network planning, energy efficiency and operational resilience.
“Next-generation networks provide the fundamental infrastructure that carries AI from data centres to people, devices, cities and industries,” he said.
Operational independence
Koç said Turkcell’s investments in energy, data centres and cloud technologies were part of a broader strategy aimed at strengthening Türkiye’s digital infrastructure capabilities.
“One of the most critical fronts in today’s global power competition is this: Countries that generate their own energy, process their own data within their borders and build their own cloud infrastructure will shape tomorrow,” he said.
Koç said Turkcell’s efforts across energy, data, cloud, AI models and applications were components of a single integrated strategy.
“Our goal as Turkcell is operational independence in digital infrastructure,” he said. “We are moving forward with an open, balanced and multi-source technology approach, without depending on either East or West and without compromising our national regulations.”
“This goes beyond our company; it is our national responsibility. We view every piece of infrastructure we build in our country as a strategic contribution to our national future.”
Türkiye’s central bank said Friday the Middle East conflict had delayed the disinflation process, but deterioration in expectation has remained limited, while the slowdown in economic activity continued under tight financial conditions.
Supply shocks mainly due to the fallout from the Iran war had pushed Türkiye’s headline inflation higher in April and May, but June signaled the return of a downward trend.
The annual inflation eased to 32.1% last month from 32.6% in May. The decline had stalled following a sharp rise in energy prices caused by the war launched by the U.S. and Israel against Iran on Feb. 28.
On a monthly basis, consumer prices rose 0.99% in June, slowing from 1.7% in May.
“Recent uptick in underlying inflation poses upside risks for near term inflation,” Central Bank of the Republic of Türkiye (CBRT) Governor Fatih Karahan told an event in Istanbul.
Karahan said easing rigidity in rents and education prices was supporting disinflation in the services sector, while recent strength in core goods inflation was expected to moderate.
He reiterated that the central bank would maintain a tight monetary policy stance until price stability was achieved.
“The tight monetary policy stance, which will be maintained until price stability is achieved, will strengthen the disinflation process through demand, exchange rate, and expectation channels,” he added, according to his presentation released by the bank.
Last month, the Central Bank of the Republic of Türkiye (CBRT) held its one-week repo rate steady for a third consecutive meeting as it monitored the impact of the Iran war.
Since the conflict started, the bank has halted an easing cycle that began in late 2024 and taken other liquidity steps that pushed the Turkish lira overnight rate up to the 40% limit.
The CBRT raised its end-2026 inflation forecast to 24% from 16% in its quarterly inflation report published in mid-May, saying the short-term inflationary effects of the Iran war would remain “pronounced.”
The bank projects inflation falling to 15% at the end of 2027 and 9% at the end of 2028.
Strong lira demand
Karahan said Friday the CBRT “will determine the policy rate by taking into account realized and expected inflation and its underlying trend in a way to ensure the tightness required by the projected disinflation path in line with the interim targets.”
“Monetary policy stance will be tightened in case of a significant deviation in inflation outlook from the interim targets,” he noted.
Karahan said the distribution of household and real sector expectations has improved recently. He added that household demand for foreign currency remained limited and confidence in the Turkish lira continued to hold firm
He said the central bank’s foreign exchange reserves remained at robust levels.
Data on Thursday showed CBRT’s gross international reserves rose by $10.49 billion to $159.69 billion in the week ending July 3
Gross foreign exchange reserves increased by $7.70 billion to $61.95 billion, while gold reserves climbed by $2.79 billion to $97.74 billion.
Karahan said capacity utilization in Türkiye remained below historical averages and demand indicators pointed to a slowdown in economic activity.
Credit growth has moderated, while the trade deficit narrowed in the second quarter, he added, noting that the impact on tourism had remained limited.
He also said Türkiye’s balance of payments remained moderate relative to historical averages.
Aselsan, Türkiye’s largest defense electronics company, announced Friday it had signed a contract worth approximately 1.47 billion euros ($1.68 billion) to expand the serial production of air defense systems.
The agreement was signed with the Presidency of Defense Industries (SSB) as an addition to ongoing serial production projects, Aselsan said in a disclosure to the Public Disclosure Platform.
The company said the deal is expected to boost revenue but did not disclose a delivery timetable or specify which systems the contract covers.
The company is one of the main suppliers of Türkiye’s integrated, multilayered Steel Dome air defense architecture. It develops technologies in areas including air and missile defense, radar, electronic warfare, military communications, electro-optics and command-and-control systems.
Aselsan CEO Ahmet Akyol said the agreement would further strengthen the serial production capacity of Türkiye’s air defense systems and support the Steel Dome.
“We continue to strengthen the Steel Dome,” Akyol said on the Turkish social media platform NSosyal. “With the support of our state, we will continue producing in high volumes and working resolutely for the security of our country,” he added.
NATO member Türkiye first announced plans to build the Steel Dome in July 2024, capping years of significantly ramping up defense production and reducing its dependence on external suppliers.
The architecture crowns years of investment that have helped Türkiye transform from a nation heavily reliant on foreign equipment to one where homegrown systems meet almost all of its defense needs.
The network aims to provide integrated protection against low-, medium- and high-altitude threats through land- and sea-based, locally developed missile batteries, radars, electro-optical sensors, communications modules and command-and-control centers.
Shares soar
In May, Akyol said the company would increase the delivery of products by 50% as part of the Steel Dome, adding that they aimed to deliver more than 150 different components in 2026.
He said the parts to be delivered by Aselsan included early warning radars, electronic combat and defense systems and payloads, noting that the Steel Dome parts will comprise nearly a third of the firm’s portfolio in the coming years.
Last year, defense companies signed $6.5 billion worth of contracts to reinforce and develop the Steel Dome. Of those, some $3.2 billion worth belonged to Aselsan.
Aselsan shares rose over 4% following Friday’s announcement. The company has outperformed leading global defense and aerospace firms, as its shares gained almost 49% in the first half of the year.
Often working in close joint production with another Turkish defense company, Roketsan, Aselsan provides systems to cover everything from low-altitude micro-drones to high-altitude ballistic protection.
Some of the products include the Korkut, a mobile, dual-barrel, self-propelled anti-aircraft gun; the Hisar-A and Hisar-O, low- and medium-altitude air defense missile systems; and the Siper, a long-range, high-altitude air and missile defense system.
Aselsan also supplies Hakim, the upper-level command-and-control system responsible for coordinating the components within the architecture.
New air defense mass production deals
Separately, on Friday, the SSB said it signed additional serial production contracts with Aselsan and Roketsan for the Hisar-A and Hisar-O systems for the Steel Dome.
“A major day in the defense of the Sky Homeland,” SSB head Haluk Görgün said in a statement on the Turkish social media platform NSosyal.
Görgün added that Türkiye is determined to reinforce its air defense architecture and commitments within NATO.
The Hisar family was developed jointly by Aselsan and Roketsan, while the missile warheads were developed by the defense research institute TÜBITAK SAGE.
Hisar-A is designed primarily to protect mobile and armored units against low-altitude threats, while Hisar-O provides medium-altitude point and regional air defense.
The systems are designed to counter threats including fighter jets, helicopters, cruise missiles, air-to-surface missiles and armed or unarmed drones. The Hisar-A+ variant has an interception range of up to 15 kilometers (9.3 miles), while Hisar-O+ can engage targets at distances of up to 25 kilometers.
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