2014 has so far been a tough year for Turkey as it has been a time of a negative outlook towards emerging markets in general, coupled with warfare in Syria, Iraq, Gaza and Ukraine
To top these difficulties, Turkey’s main exports market, Europe, remains in crisis. However, the country’s economy has performed superbly so far into 2014; a fact appreciated by all analysts. The latest good news came with the announcement that Deputy Prime Minister Ali Babacan will be at the helm of the economy in the new cabinet that will be formed after Prime Minister Recep Tayyip Erdoğan’s ascent to presidency. The markets have been relieved by the news about Babacan.
The stock market has returned to around 90,000 points while the interest rates have eased significantly. Sound macroeconomic indicators, including the low percentage of credit default at 2.5 percent and the low debt ratio of consumers, signal that Turkey will remain a center of attraction for foreign investors for the period ahead.
Ability to find new markets
The Turkish economy has traditionally been very dynamic and it has always been able to find ways out of crises, notes Ercan Kumcu, a former Central Bank governor and a world-renowned economist. Kumcu said: “You’ll remember that in the ‘80s, about 80 percent of our exports were to Middle East and North African nations. In a relatively short period of 10 years, we were able to move 60 percent of our exports to OECD nations. When a market shuts down for us, this forces us to try other doors. Turkey has been able to enter new markets over the past few years. Certainly, the geopolitical risks do not make up for a pleasant situation. But Turkey will find a way out.”
The recently released HSBC Global Connections report seem to confirm Kumcu’s outlook. The report notes: “Turkey’s geographic position and its strong trade links with countries in the Middle East and Central Asia mean that it has a solid foundation on which to grow exports strongly over the medium term. Measured in value-added terms, Turkish manufactured goods lag behind those of competitors in Europe, but imports of high-tech goods will help Turkey to close this gap.”
