2014 has been a year of tension in Turkey as a year of elections, but the potential of the Turkish economy is causing foreign investor interest to return to the country
Investments from abroad keep coming into various sectors in Turkey. The latest example of this was the Commercial Bank of China (ICBC) acquiring Turkey’s Tekstilbank. With ICBC’s acquisition, four of the five largest lenders in the world are now active in Turkey. ICBC is the world’s biggest lender, and a giant in financing major investments. For Turkey, which has owes its growth rate to its strong domestic consumption, this acquisition means a lot as the volume of bilateral trade between the two nations already exceeds $28 billion.
Share of construction & real estate down
A recent report released by the global consultancy and research company Oxford Business Group (OBG) also agrees that Turkey will continue to attract foreign investors. The report says that in January 2014, the amount of foreign direct investments (FDI) Turkey received increased by 45 percent in comparison with the same month the previous year; an auspicious start to the year. According to data from the Turkish Central Bank, Turkey received $10.1 billion FDI in 2013, down from $10.7 in 2012. OBG says that investments in construction and real estate, traditionally two areas where foreign investors are most interested in, have decreased sharply but the country has earned a sound $25 billion dollar revenue from privatizations in the energy sector, marking a 24.7 percent increase in this area in comparison with 2012. The report also noted that the decrease in foreign investment in 2013 was the result of international developments rather than a cooling in the growth rate of the Turkish economy.
Increasingly competitive
The fact that FDI Turkey received in 2014 was $841 million, compared to $580 million in January of 2013, bodes well for the months ahead, although OBG has said it is too early to make a prediction for the entire year and more data are needed before a longer-term conclusion can be drawn. A recent HSBC report has said the Turkish economy is becoming increasingly competitive in international trade, although the domestic market has been affected by the fluctuations in the exchange rate over the past 5-6 months.
“The HSBC report says that Turkey’s location and strong trade ties with the Middle East and Central Asia will likely strengthen the country’s exports over the medium term. The report also says Turkey’s main export markets — which were Germany, the UK, the UAE, France and the US in 2012 — will be replaced by UAE, Germany, China, the UK and the US in 2030.
