Last Updated on 29/11/2023
Investing in Turkey poses a complex yet intriguing narrative for global investors as they ponder the country’s economic stability in 2024. As the 19th largest economy globally, Turkey confronts a myriad of challenges, from natural disasters to hyperinflation, in its bid to secure a prominent spot among the G20 powerhouses. Despite these odds, Turkey has undergone significant growth, implemented crucial reforms, and exhibited resilience in recent years, making it a focal point for investors seeking opportunities.
Overview of Investing in Turkey:
Turkey’s journey between 2006 and 2017 witnessed ambitious reforms and robust growth rates, resulting in a substantial reduction in poverty. According to World Bank data, the percentage of individuals below the $6.85 per day poverty line nearly halved to 9.8% between 2006 and 2020. Experts attribute this success to Turkey’s highest youth population among EU countries, creating a youthful workforce with significant potential. The country’s emphasis on education is evident, with approximately 1 million undergraduates graduating yearly from over 200 universities, contributing to a highly productive workforce. Consequently, these facts joined together make investing in Turkey a good opportunity.
Economic Challenges and Achievements:
Despite challenges such as high private sector debt, current account deficits, inflation, and unemployment rates, investing in Turkey is still appealing to interbational investors. In fact, Turkey achieved a robust economic growth of 5.6% in 2022 following the COVID pandemic recovery. The resilience of Istanbul, particularly after the devastating earthquakes in February 2023, showcases the city’s emergence as a regional hub for foreign investors. Despite the estimated $34.2 billion direct losses from the earthquakes, Istanbul’s adaptability and strategic significance continue to attract foreign investments.
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OECD Economic Outlook:
The OECD Economic Outlook for June 2023 projects a moderate economic growth of 3.6% in 2023, primarily fueled by domestic demand as weaker exports impact the overall outlook. Despite earthquake-related disruptions, rapid reconstruction efforts are expected to offset the negative impact on economic activity. While the unemployment rate is anticipated to hover around 10%, and inflation stands at 58%, projections indicate a return to normal rates of 15% by the end of 2025, with nominal wages on a rapid ascent. Consequently, these insights give a promising outlook regarding investing in Turkey!
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Investment Incentives and Strategic Advantages:
Despite uncertainties, investing in Turkey and FDI flows, propelled by numerous investment opportunities, incentive programs, a liberal investment environment, and strategic geographical leverage. Turkey serves as a gateway for international companies looking to expand into diverse markets, with a youthful demographic profile enhancing its appeal. Ongoing reforms contribute to an attractive business environment, exemplified by a shortened time period of 6.5 days to start a business, down from 38 days. Additionally, Turkey’s access to approximately 1 billion consumers in the regional market through free trade agreements adds to its allure.
Morevoer, the integration of Environmental, Social, and Governance (ESG) policies is gradually gaining traction in Turkey, with a potential shift in client priorities as regulatory standards, particularly in exporting to the EU, become crucial. This hints at future investments in sustainability to align with international business norms.
Conclusion:
In conclusion, Turkey, with its historical significance, economic resilience, and strategic advantages, remains an enticing destination for foreign investment. As the nation navigates economic challenges and opportunities, insights provide a glimpse into the evolving narrative of doing business in Turkey—a tale of adaptability, strategic foresight, and continuous growth. Despite the hurdles, the nation’s attractiveness to investors persists, marking Turkey as a compelling choice for those seeking a blend of historical richness and forward-thinking economic opportunities.
