Will foreign investment in Turkey return to pre-crisis levels?
Foreign direct investment is rising in Turkey and expected to reach $16 billion by the end of the year and eventually the pre-2008 crisis level of $20 billion.
As Europe recovers from the impact of the 2008 economic crisis, so does Turkey. The recovery is visible in many aspects, including the increase in exports and the stock market’s rise to pre-crisis levels. Another major indicator of the Turkish economy’s growing output strength is the accelerated inflow of foreign direct investment (FDI).
In contrast to foreign funds that go to short-term bond and stock market investments before moving out at first opportunity, foreign direct investors put money in manufacturing and services, making a lasting positive impact on the host country’s economy by building factories and creating new jobs. Hence, FDI is the most desirable form of investment and has been on the rise in Turkey this year. The statistics point to a trend that may eventually reach the pre-crisis level of $20 billion.
In 2006 and 2007, the FDI Turkey attracted stood at $20.1 billion and $22 billion respectively before dropping to $19.7 billion in 2008 with the arrival of the global crisis. The real impact was felt the following year, when FDIs dropped sharply to $8.6 billion. The figure rose to $9 billion in 2010 and then soared to $16 billion in 2011. This upward movement, however, did not last: FDIs declined to $13.2 billion in 2012 and $12.7 billion in 2013.
The FDI level in 2014 will be crucial, for it will signal whether the regress continues or whether an upward trend has begun. Optimism currently prevails on the issue.
