Turkish officials are again trying to turn a mature trade relationship with Italy into a larger investment corridor, with the Presidency Investment and Finance Office saying Italian interest in Türkiye is expected to rise in 2026. The signal matters because it comes at a point when Ankara is courting higher value foreign direct investment, Italian manufacturers are reassessing supply chains around the Mediterranean, and both governments have moved from broad diplomatic language to sector-specific cooperation in defense, energy, logistics, machinery, infrastructure, tourism and start-ups.
A Strategic Partnership Moves Into Investment Mode
Bekir Polat, deputy head of the Presidency Investment and Finance Office, told Anadolu Agency in Rome on November 26, 2025 that Türkiye and Italy had entered what he called a “strategic partnership phase,” citing President Recep Tayyip Erdoğan’s official visit to Italy earlier in 2025 and the investment agenda outlined with Italian Prime Minister Giorgia Meloni. Polat said Turkish officials held a two-day programme in Rome with companies from multiple sectors, presenting Türkiye’s investment climate, incentives, trade position and human capital.
The headline numbers are substantial, but also reveal room for expansion. Polat said bilateral trade stood at about $32 billion and that the two countries had set a $40 billion target. He also said more than 1,600 Italian companies operate in Türkiye, with total Italian investment exceeding $5 billion. The Turkish Ministry of Foreign Affairs gives a slightly more conservative but broadly consistent baseline, reporting 2025 bilateral trade at $29 billion, with Turkish exports of $13.27 billion and imports from Italy of $15.73 billion. The ministry says more than 1,500 Italian firms are active in Türkiye and that Italian direct investment into Türkiye reached almost $5.1 billion in 2002-2024.
For investors, the key point is not whether the latest trade figure is $29 billion or $32 billion. The important signal is that Ankara and Rome are treating the relationship as a production, technology and market-access platform, not simply an import-export channel. Türkiye’s customs union with the European Union, its industrial base, and its access to markets in the Balkans, the Caucasus, the Middle East and North Africa give Italian firms a reason to consider local incorporation, production partnerships and regional distribution hubs.
Trade Data Show Why Italy Matters
The commercial relationship is unusually balanced by emerging-market standards. According to Anadolu Agency, citing Türkiye Exporters Assembly data, Turkish exports to Italy hit an all-time high of $12.4 billion in 2025, up 3 percent year on year. Italy accounted for 4.5 percent of total Turkish exports, placing it behind Germany, the United Kingdom and the United States among top export destinations.
The composition of that trade explains why investment discussions are concentrated in industrial sectors. Anadolu Agency reported that Türkiye’s automotive exports to Italy reached $3.3 billion in 2025, followed by chemicals at $1.7 billion, steel at $1.1 billion, ferrous and non-ferrous metals at $1 billion, textiles and raw materials at $733.3 million, electrical and electronics products at $707.4 million, and machinery and equipment at $579.9 million. The Turkish Ministry of Foreign Affairs separately identifies passenger vehicles, goods vehicles, machinery and fruit among Türkiye’s main exports to Italy, while parts and accessories for motor vehicles, petroleum oils, yachts and vessels are among Türkiye’s main imports from Italy.
This is not a narrow consumer-goods relationship. It is a manufacturing relationship built around components, machinery, transport equipment, industrial inputs and logistics. For Italian companies, that creates two distinct routes into Türkiye. One is export-led market entry, using distributors, expo representation and import-export facilitation to build sales before committing capital. The other is direct investment, including company incorporation, plant location, joint ventures, supplier development and investment-incentive applications.
The second route is becoming more relevant as European manufacturers seek supply-chain resilience closer to the EU market. Türkiye’s automotive industry illustrates the attraction. The Uludağ Automotive Industry Exporters’ Association reported that Türkiye’s automotive exports rose 11.6 percent in 2025 to $41.5 billion, making the sector the country’s export champion again. The same source said the EU absorbed $30.11 billion of those exports, equal to 72.5 percent of the total. For Italian automotive suppliers, that scale makes Türkiye not only a sales market, but also a potential production base inside a deeply integrated European value chain.
Defense and Aerospace Set the New Tone
The most visible symbol of the new Italian-Turkish industrial phase is defense aerospace. The Associated Press reported that Erdoğan and Meloni oversaw the exchange of a dozen cooperation agreements during the fourth Italy-Türkiye Intergovernmental Summit in Rome on April 29, 2025, including defense agreements. AP noted that the summit followed Baykar’s acquisition of Italian aircraft producer Piaggio Aerospace and a memorandum of understanding between Baykar and Leonardo for unmanned aerial vehicle production.
That cooperation has since moved from announcement to implementation. Leonardo said on June 16, 2025 that it and Baykar had established LBA Systems, a 50:50 joint venture based in Italy, to design, develop, produce and maintain unmanned aerial systems. On July 21, 2026, Leonardo announced that LBA Systems had achieved full operational readiness after regulatory authorizations were secured and leadership was appointed. The company said the venture combines Leonardo’s electronics, payload integration and EU certification capabilities with Baykar’s unmanned aircraft platforms and manufacturing processes.
Reuters reported in June 2026 that Italy had conditionally approved the Leonardo-Baykar venture under its “golden power” rules, with conditions limiting sales and further international development to countries politically aligned with Europe and NATO and classifying the technology used in the drones. That detail is critical for foreign investors considering sensitive sectors in Türkiye or joint operations involving Turkish and European entities. Industrial opportunity now sits alongside export-control planning, national-security review, intellectual-property allocation, defense procurement rules and compliance with NATO-aligned market restrictions.
The aerospace example also has a broader implication. Italian investment in Türkiye is not likely to be confined to legacy sectors such as textiles, food and basic manufacturing. Polat specifically cited aviation and defense among the strongest cooperation areas. Türkiye’s HIT-30 High Technology Investment Program, presented by the Ministry of Industry and Technology, targets more than 30 priority subjects across semiconductors, mobility, green energy, advanced manufacturing, healthy living, digital technologies, communication and space, and value-chain-complementary investments. The ministry says the programme is designed to provide project-based incentives, market-development support, site opportunities, favorable financing and high-level policy support, with $30 billion of support planned by 2030.
Machinery, Agriculture and Trade Fairs Remain Practical Entry Points
High technology will attract headlines, but the Italian-Turkish investment story is also being built through machinery and mid-market industrial suppliers. FederUnacoma, the Italian agricultural machinery manufacturers’ federation, said in April 2026 that trade between Italy and Türkiye in agricultural machinery reached nearly €500 million in 2025. It said Italy remained Türkiye’s leading supplier in the sector with an 18.2 percent share, while Italian imports of agricultural machinery from Türkiye grew 19 percent to more than €210 million. Italian exports to Türkiye were approximately €230 million, down 20 percent from the previous year but still above pre-pandemic levels.
FederUnacoma’s analysis is useful because it shows both opportunity and risk. The federation linked the slowdown in Turkish tractor sales, down 36 percent in 2025, to inflationary pressures, access to agricultural credit and global uncertainty. In other words, Italian suppliers may see long-term demand for mechanization, irrigation, digital farming and components, but they must adapt their pricing, financing and after-sales models to local credit conditions.
Trade fairs remain a practical bridge. The Italian Trade Agency lists an Italian pavilion at the International Astronautical Congress in Türkiye on October 5-9, 2026 and an Italian pavilion at ANKIROS 2026 in Istanbul on October 22-24, 2026, focused on metallurgy machinery. These events are not peripheral. For many industrial firms, expo representation is the first test of demand, distributor quality, buyer seriousness and regulatory fit. A company that treats a Turkish fair only as a sales event may miss the deeper questions that determine whether the next step should be a representative office, a Turkish limited company, a joint venture, a warehouse operation or a manufacturing site.
Macroeconomic Conditions Still Require Caution
Türkiye’s investment case has improved, but it is not frictionless. The Presidency Investment Office says Türkiye attracted around $288 billion in FDI during 2003-2025, compared with only $15 billion up to 2002, and that the number of companies with international capital reached 86,926 by mid-2025. It also cites EY data showing Türkiye as Europe’s fourth most popular greenfield FDI destination in 2024, with 351 projects.
Recent FDI momentum appears stronger. Anadolu Agency reported, citing the International Investors Association, that foreign direct investment inflows reached $12.4 billion in January-November 2025, up 28 percent year on year. UNCTAD’s World Investment Report 2026 said global FDI rose 6 percent to $1.6 trillion in 2025, a fragile recovery after two years of decline. In that environment, Türkiye’s ability to attract additional industrial investment is noteworthy.
Yet macroeconomic volatility remains central to due diligence. The IMF’s Türkiye country data, updated after the February 2026 Article IV consultation, projects 2026 real GDP growth of 2.9 percent and consumer-price inflation of 28.6 percent. The World Bank’s October 2025 overview forecast 3.7 percent growth in 2026 and gradual disinflation, with inflation declining to 18 percent by end-2026, while warning that risks remain skewed to the downside due to inflation expectations, exchange-rate pressure, reserves and oil prices. Reuters reported in August 2026 that the Turkish central bank kept its end-2026 inflation target at 24 percent and its end-2027 target at 15 percent.
For Italian and other foreign investors, this means project models must be stress-tested in local currency and hard currency. Lease terms, supplier contracts, employment costs, working-capital lines, customs payments and transfer-pricing policies all need inflation and exchange-rate scenarios. Legal and tax compliance is not an administrative afterthought in this environment. It is part of the investment thesis.
From Bilateral Goodwill to Execution Risk
The optimism voiced by the Investment and Finance Office is credible because it is supported by trade intensity, political engagement and sectoral complementarity. Italy brings machinery, automotive components, aerospace capabilities, finance, design, food processing and energy technologies. Türkiye offers a large domestic market, competitive manufacturing depth, EU-linked trade architecture, younger labor demographics and access to surrounding regions.
But converting interest into FDI requires navigating a layered operating environment. Investors need to decide whether Türkiye is best used as a market, a production base, a procurement hub, a regional headquarters or a joint-venture platform. That decision affects incorporation structure, tax exposure, customs classification, incentive eligibility, employment planning, land acquisition, environmental permitting and government-facing approvals.
The sectors highlighted by Polat each carry different execution requirements. Defense and aerospace require government relations, export-control compliance and careful IP governance. Energy projects require incentives analysis, licensing, grid and land coordination, and often local stakeholder management. Logistics investments require site selection around ports, industrial zones, rail links and customs procedures. Machinery and industrial equipment firms need distributor vetting, import-export facilitation, after-sales service structures and trade-fair follow-up. Tourism and gastronomy require location strategy, brand protection, labor compliance and municipal permissions.
The Italian case therefore offers a broader lesson for any foreign investor entering Türkiye. Political support can open doors, but it does not replace ground-level project management. Incentives can improve returns, but only if the project is structured correctly before applications are filed. Trade volume can validate demand, but demand still needs local contracts, licenses, tax planning and operational execution.
What This Means for Foreign Investors
Italian investment in Türkiye is likely to increase where three conditions overlap: a real industrial complementarity, a regulatory pathway that can be managed, and a local execution plan strong enough to withstand macroeconomic volatility. The sectors now receiving official attention, including aerospace, defense, energy, logistics, machinery, infrastructure, tourism, gastronomy and start-ups, all meet the first test. The second and third tests will determine which announced interest becomes durable capital.
For a foreign investor, the practical sequence should begin with market entry analysis that separates export potential from investment potential. The next step is choosing the right incorporation and corporate structure, particularly where a Turkish entity will hold licenses, employ staff, import equipment or apply for incentives. Investment incentives should be mapped early against project size, technology content, region, employment and export plans. Legal and tax compliance needs to cover contracts, customs, transfer pricing, labor law, sector licensing and reporting obligations.
Government relations matter because many of the most attractive opportunities sit in regulated or policy-sensitive sectors. Expo representation can be useful for Italian and other European firms testing demand at Turkish trade fairs, but follow-up must be systematic, with qualified buyer screening and distributor due diligence. Import-export facilitation is essential where machinery, automotive components, food inputs, chemicals or dual-use technologies cross borders. Project management becomes decisive once a company moves from interest to implementation, because land, permits, suppliers, staffing, incentives and public authorities must be coordinated on the ground.
The message from Ankara is that Italian investors will find a more active welcome in Türkiye in 2026. The message for investors is more demanding: opportunity is real, but returns will depend on disciplined structuring, regulatory navigation and execution, not diplomatic momentum alone.