Table of Contents 1. Introduction 7 1.1. What is this Report About? 7 1.2. Definitions 7 1.3. Summary Methodology 9 1.4. About Strategic Defence Intelligence 10 2. Executive Summary 11 3. Market Attractiveness and Emerging Opportunities 13 3.1. Current Market Conditions 14 3.1.1. Military fleet size 14 3.1.2. Procurement Programs 18 3.1.3. Key Drivers and Challenges 19 3.2. Defense Market Size Historical and Forecast 21 3.2.1. Turkey defense expenditure expected to grow during the forecast period 21 3.2.2. Turkey’s strained relationship with Greece, increasing security threat from PKK and active involvement in peacekeeping missions to drive the defense industry 23 3.2.3. Military expenditure as a percentage of GDP is expected to decline over the forecast period 24 3.3. Analysis of Defense Budget Allocation 27 3.3.1. Share of capital expenditure to increase over the forecast period 27 3.3.2. Capital expenditure to increase over the forecast period 29 3.3.3. Per capita defense expenditure to rise over the forecast period 31 3.4. Homeland Security Market Size and Forecast 33 3.4.1. Homeland security (HLS) expenditure expected to grow over the forecast period 33 3.4.2. Threats driving homeland security expenditure 35 3.4.3. Turkey faces a high level of terrorist threat 36 3.4.4. Turkey faces high level of threat from foreign terrorist organizations 37 3.4.5. Turkey has a terrorism index score of 7.5 39 3.5. Benchmarking with Key Global Markets 40 3.5.1. Turkish defense expenditure expected to remain low compared to leading spenders 40 3.5.2. The country’s defense budget is high compared to its regional countries 42 3.5.3. Turkey defense expenditure as a percentage of GDP is expected to decrease 43 3.6. Market Opportunities: Key Trends 44 3.6.1. Top 10 Defense market sectors by value (US$ Million) - Projections over period 2018-2023 44 4. Defense Procurement Market Dynamics 45 4.1. Import Market Dynamics 46 4.1.1. Defense imports expected to decrease over the forecast period 46 4.1.2. The US was the primary supplier of arms to Turkey 47 4.1.3. Aircraft were the major imported military hardware during 2012-2016 48 4.2. Export Market Dynamics 49 4.2.1. Turkey aims to increase defense exports over the forecast period 49 4.2.2. Turkmenistan emerged as the largest importer of Turkish defense equipment during the period 2012-2016 50 4.2.3. Naval vessels accounted for the majority of defense exports during 2012-2016 51 5. Industry Dynamics 52 5.1. Market Regulation 52 5.1.1. The Turkish government encourages offsets to develop the country’s domestic industrial defense base 52 5.2. Market Entry Route 54 5.2.1. Budgeting Process 54 5.2.2. Procurement policy and process 56 5.2.3. Joint venture provides market entry opportunity for foreign OEMs 57 5.2.4. Joint research and development programs provide foreign OEMs with an opportunity for market entry 58 6. Competitive Landscape and Strategic Insights 59 6.1. Competitive Landscape Overview 59 7. Business Environment and Country Risk 61 7.1. Economic Performance 61 7.1.1. GDP per capita 61 7.1.2. GDP, current prices 62 7.1.3. Export of goods and services (LCU Billion) 63 7.1.4. Import of goods and services (LCU Billion) 64 7.1.5. Gross national disposable income (US$ Billion) 65 7.1.6. Local currency unit per US$ 66 7.1.7. Market capitalization of listed companies 67 7.1.8. Market capitalization of listed companies as a percentage of GDP 68 7.1.9. Government cash surplus deficit as a percentage of GDP 69 7.1.10. Goods Exports as a percentage of GDP 70 7.1.11. Good imports as a percentage of GDP 71 7.1.12. Service imports as a percentage of GDP 72 7.1.13. Service exports as a percentage of GDP 73 7.1.14. Foreign direct investments 74 7.1.15. Net foreign direct investment as a percentage of GDP 75 7.1.16. Mining, manufacturing, utilities output 76 8. Appendix 77 8.1. About SDI 77 8.2. Disclaimer 77

List of Tables Table 1: Turkey - Army Strength 14 Table 2: Turkey - Navy Strength 16 Table 3: Turkey - Air Force Strength 17 Table 4: Turkey - Ongoing Procurement Programs 18 Table 5: Turkish Future Procurement Programs 19 Table 6: Turkey - Defense Expenditure (TRY Billion and US$ Billion), 2014-2023 22 Table 7: Turkey - GDP Growth vs Defense Expenditure According to Percentage of GDP Growth, 2014-2023 25 Table 8: Turkey - Defense Budget Split by Capital and Revenue Expenditure (%), 2014-2023 27 Table 9: Turkey - Defense Capital Expenditure (TRY Billion and US$ Billion), 2014-2023 29 Table 10: Turkey - Per Capita Defense Expenditure (US$), 2014-2023 31 Table 11: Turkey - Homeland Security Expenditure (TRY Billion and US$ Billion), 2014-2023 33 Table 12: Terrorism Index, 2018 37 Table 13: Benchmarking with Key Markets - 2014-2018 vs 2019-2023 40 Table 14: Top 10 Turkey Defense Market Sectors by Value (US$ Million) - 2018-2023 44 Table 15: Turkey - Offset Regulations (%) 52 Table 16: Turkey - Technological Cooperation, Investment, and R&D Multiplier Provision 53 Table 17: Multipliers for Export Related Systems 53 Table 18: Turkey - Budget Formation Timetable 54 Table 19: Turkey - Market Entry by Key Foreign Companies 57 Table 20: Turkey - Market Entry by Key Foreign Companies 58 Table 21: Turkey - Competitive Landscape of Defense Industry, 2018 59List of Figures Figure 1: Turkey - Defense Expenditure (TRY Billion), 2014-2023 22 Figure 2: Turkish Defense Expenditure (US$ Billion), 2014-2023 23 Figure 3: Turkey - GDP Growth vs Defense Expenditure According to Percentage of GDP Growth, 2014-2023 25 Figure 4:Turkey - Defense Budget Split by Capital and Revenue Expenditure (%), 2014-2023 28 Figure 5: Turkey - Defense Capital Expenditure (TRY Billion), 2014-2023 30 Figure 6: Turkey - Defense Capital Expenditure (US$ Billion), 2014-2023 30 Figure 7: Turkish Per Capita Defense Expenditure (US$), 2014-2023 32 Figure 8: Turkey - Homeland Security Budget (TRY Billion), 2014-2023 34 Figure 9: Turkish Homeland Security Budget (US$ Billion), 2014-2023 34 Figure 10: Terrorism Heat Map, 2018 36 Figure 11: Terrorism Index, 2018 39 Figure 12: Benchmarking with Key Markets - 2014-2018 vs 2019-2023 41 Figure 13: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2018 and 2023 42 Figure 14: Defense Expenditure According to Percentage of GDP of Largest Military Spenders (%), 2018 43 Figure 15: Turkey - Defense Imports Trend (US$ Million), 2012-2016 46 Figure 16: Turkey - Defense Imports by Country (%), 2012-2016 47 Figure 17: Turkey - Defense Imports by Category (%), 2012-2016 48 Figure 18: Turkey - Defense Exports Trend, 2012-2016 49 Figure 19: Turkey - Defense Exports by Country (US$ Million), 2012-2016 50 Figure 20: Turkey - Defense Exports by Category (%), 2012-2016 51 Figure 21: Turkey - GDP Per Capita (US$), 2015-2025 61 Figure 22: Turkey - GDP Current Prices (US$ Billion), 2015-2025 62 Figure 23: Turkey - Export of Goods and Services (LCU Billion), 2005-2014 63 Figure 24: Turkey - Import of Goods and Services (LCU Billion), 2005-2014 64 Figure 25: Turkey - Gross National Disposable Income (US$ Billion), 2005-2012 65 Figure 26: Turkey - LCU per US$, 2015-2024 66 Figure 27: Turkey - Market Capitalization of Listed Companies (US$ Billion), 2005-2012 67 Figure 28: Turkey - Market Capitalization of Listed Companies (Percentage of GDP), 2005-2012 68 Figure 29: Turkey - Cash Surplus Deficit as (Percentage of GDP), 2008-2012 69 Figure 30: Turkey - Good Exports as a Percentage of GDP, 2005-2014 70 Figure 31: Turkey - Good Imports as a Percentage of GDP, 2005-2014 71 Figure 32: Turkey - Service Imports as a Percentage of GDP, 2005-2014 72 Figure 33: Turkey - Service Exports as a Percentage of GDP, 2005-2014 73 Figure 34: Turkey - Foreign Direct Investments (BoP, Current US$ Billion), 2005-2014 74 Figure 35: Turkey - Net Foreign Direct Investment as a Percentage of GDP, 2005-2014 75 Figure 36: Turkey - Mining, Manufacturing, Utilities Output (LCU Billion), 2005-2014 76