Turkey Gaining Name as Top European Emerging Market

Posted on 27 August 2010

The stability of the Turkish banking sector, the currency, and the growth potential of the economy are continuing to impress global investors, and making its receiving Investment Grade status from the ratings agencies continuously more likely.

"Turkey is Europe’s BRIC," asserted David Cameron on a recent trip to Ankara. For anyone that doesn’t know, BRIC is an acronym of Brazil, Russia, India and China, considered the world’s most powerful emerging markets.

The Turkish economy is growing at the fastest rate in Europe, with year on year growth of 6% in the final quarter of last year, beaten only by the 11.7% year on year growth recorded by Turkey in the first quarter of this year.

Inflation is apparently on course to come down from the current 7.5% to the mid-term target of 5%. With structural reforms akin to those seen in the UK and US after the crunch were made in Turkey during a similar crash in 2001, so liquidity and equity are both running high in the economy. The currency is running very stable against both the pound and dollar.

What’s more Turkey has bypassed the EU to shore up its own growth, with multiple deals to increase trade and bilateral ties in the last 2 years, including a strategic alliance with Brazil, a deal to increase trade with the US by a factor of 3, and a free trade agreement with Lebanon, Jordan and Syria. This is of course on top of visa-free agreements with those 3, Albania, Russia, Libya, Kosovo and Sudan.

With all this in Turkey’s column, against an EU near-crumbling at the hands of a sovereign debt crisis no one would have dared suggest we’d see, it is easy to understand why Turkey is standing out to investors as the best place to invest. This was clearly seen recently, when reports emerged that Turkish swaps (insurance against default) were trading at about the same rate as that of Russia — a clear sign that investors believed Turkey was as safe a place to invest as the emerging Russian giant.

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