Agency upgrade boosts Turkey’s investment appeal, aiding its vision to be a top 10 economy

Turkey has edged closer to achieving its target of becoming one of the world’s top 10 economies by 2023, after it was awarded investment grade rating this month by Moody’s, significantly its second upgrade by one of the world’s three main credit rating agencies within the space of six months.

The country now enters an international grade pool that includes Hungary and Spain, ahead of a group of Eurozone countries, which includes Cyprus, Portugal, Ireland and Greece, all of which have non-investment grade ratings.

Julian Walker, director at Turkey property specialist Spot Blue, commented: “The investment upgrade is one consequence of the government’s overall strategy to create the right environment to attract foreign investors. The bigger, longer term goal of Prime Minister Erdogan and his government is to grow from being the world’s 16th largest economy, in terms of GDP, to being one of the world’s 10 largest economies.”

A direct consequence of Turkey’s investment grade rating could be a boost to Foreign Direct Investment (FDI), according to the International Investors Association of Turkey (YASED), which means the country could exceed its predicted FDI total for 2013 of $15-20billion.

“Complementing its GDP target, YASED this month announced its aim of being in the world’s top ten countries for FDI,” added Julian Walker at Spot Blue. “The country currently in tenth place in terms of global share of FDI annually attracts around $40-50billion worth of FDI. Turkey aims to match this and increase its current one per cent share to three per cent by 2023.”

Statistics from YASED show that total international capital stock in Turkey grew tenfold to $180billion in 2012 from $18billion in 2002, and that the number of companies with international capital in Turkey exceeded 30,000 in 2012 from 10,000 in 2005. International companies now make up 140 of the Istanbul Chamber of Industry’s (ISO) 500 listed companies, but account for 44 per cent of all 500 companies’ total exports, 30 per cent of their production sales and 28 per cent of their employment figures.

Initially, Istanbul is expected to benefit most from any rise in FDI in Turkey, as its status as an international financial hub grows. As well as commercial real estate opportunities, the effect on the property market there is an increasing demand for quality residential projects in the city’s expanding suburbs, on both the European and Asian sides of the Bosphorus.

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