GlobalData: Turkish defence industry offers promise for export potential

However, the country’s economic and political issues threaten to undermine this potential, as poor fiscal policy, authoritarian politics, and erosion of an independent central banking system have limited Western investment, says GlobalData, a leading data and analytics company.

GlobalData’s latest report, “Turkey Defence Market 2024-2029”, reveals  that Türkiye’s defence budget is set to increase significantly to $73.2 billion in 2029, up from $44.5 billion in 2024. The acquisition budget, which is $8.3 billion in 2024, will rise to $12.5 billion by 2029. The personnel spend will increase from $24.1 billion in 2024 to $40.3 billion by the end of the forecast period.

Wilson Jones, Defence Analyst at GlobalData, comments: “Türkiye is struggling with rising corruption and authoritarianism, and President Recep Tayyip Erdoğan’s rule is increasingly criticized as dictatorial. The targeting of opposition figures, independent judges, and rising corruption all contributed to the EU’s 2023 decision to halt Türkiye’s EU accession due to worsening human rights.

“Economically, Türkiye has been in a major crisis since 2018, with the lira dropping from 6-1 to 35-1 against the US dollar. Inflation is rising at an alarming rate, caused in part by a large government deficit and large amounts of foreign-currency denominated debt (largely held in stronger Euros and the US dollar). These factors disincentivise foreign investment in Turkey, as other markets are perceived to offer strong returns without these risks and challenges to doing business.”

Jones continues: “One programme that highlights the Turkish defense industry’s promises and challenges is the Altay Main Battle Tank (MBT). The Altay MBT is based on the South Korean K2 Panther and heavily relies on Korean technology. The Turkish firm BMC received technological assistance from Hyundai with the development and production of initial models, with the first prototype being delivered in 2016.”

Compared to the K2, the Altay features a modified CN08 120mm cannon with improved gun stabilisers, chemical, biological, radiological, and nuclear (CBRN)- resistant armor, and a braking system that allows for rapid acceleration and deceleration to avoid anti-tank guided missiles (ATGM). The T1 and T2 are extremely similar.

The T1 was originally supposed to feature a Turkish-manufactured engine and transmission, but due to supply chain issues, it had to use a variety of German, Korean, and Ukrainian imports for these components. The T2 is the serial production that features these Turkish elements. A future T3 model will have an unmanned turret, and it is possible these earlier T1’s and T2’s could receive such upgrades. All variants are compatible with exterior reactive armor additions.

Jones concluded: “Türkiye’s acquisition plans of several hundred Altay’s indicate it seeks to replace foreign systems in this domain. There has also been significant foreign interest in the Altay reported from Columbia, Saudi Arabia, and Pakistan. Qatar has already purchased 400 units, and Oman is currently negotiating a deal with Türkiye.

“While the Altay is a powerful platform with strong export potential, its development history also indicates that Türkiye’s defence industry remains heavily reliant on international trade and assistance. This poses challenges to the government’s plans for full defence industry autarky.”