Turkey has been in the news recently for what has become known as the Gaza flotilla incident after a deadly Israeli raid on Gaza-bound ships resulted in the death of at least eight Turks and a US-Turkish citizen. However, politics and its inevitable confusion aside, what really should interest news watchers is the kind of investment that Turkey is attracting these days.
A recent article from the Anatolia News Agency shows that from Kuwait to China, companies are going overboard to invest in an emerging market that is promising to live up to the potential it has shown all these years. After the crisis of the global recession, the Turkish economy is rebounding, with the International Monetary Fund (IMF) estimating a 3.7% rise in GDP this year, the strongest among all emerging Eastern European economies. And, according to Goldman Sachs, Turkey is poised to become the ninth-largest economy in the world and the third-largest in Europe by 2050.
The Investment Support and Promotion Agency, or ISPAT says that the National Bank of Kuwait plans to buy a new Turkish bank while another Kuwaiti establishment, the Kuwait Investment Authority bought the Cevahir mall in Istanbul, the capital. China, of course, is all places these days. Several Chinese automotive manufacturers, according to the agency, are in advanced talks to open new production facilities in the country. South Korean giant Hyundai is already producing and exporting its I20 model from Turkey, with plans to further expand the facility if demand sustains. And then we have Indian interest in the form of the Oberoi Group, which plans to open a hotel in Istanbul. Even software giant Wipro is proposing to open an information technology park. The boom in Turkey is clearly no illusion. Inflation is fairly under control and unemployment levels are falling, and in a recent auction, Moody’s upgraded the country’s credit rating by one notch to Ba2. These are promising signs indeed for the Turkish economy, but there are still inherent weaknesses that the recent growth cannot camouflage.
Ranked 67th on the 2010 Index of Economic Freedom, Turkey’s tax structure and regulations, the Index noted, remain ‘burdensome’ with significant levels of corruption. Straddling a politically sensitive region between Europe and Asia, Turkey has been at the eye of many a political storm. Elections are to be held next year and Recep Tayyip Erdoğan, the current prime minister, faces an interesting battle, with his AK party hoping to return to power for the third consecutive term. Even the current faceoff with Israel over the ‘flotilla’ incident highlights just how fragile the region’s political dynamics are. It’s a delicate balancing act that Turkey has to maintain. Although the global recession has now retreated into the background, the crisis in the Euro-zone shows that economic recovery is fragile too. Adding to all this, Turkey is still waiting for membership into the European Union after having applied back in the 1950s.
But despite that frustrating and often controversial wait, Turkey has managed to hold its own to emerge as one of the most important economies in the European region, and that is what is attracting investment. Last week, California-based Clean Circle decided to invest $1 billion in Turkey’s renewable energy resources. And from Brazil, Eaton is reported to be planning another investment in the country, according to ISPAT. It appears the good times are rolling for Turkey. And one step closer to getting that ‘treat with caution’ investor attitude removed.
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