Turkey on the fast track
- Attractiveness for foreign investors continues to rise and FDI are booming
- The vast local market is growing fast: Turkey’s GDP per capita (now greater than EUR 4,200) is 80 per cent higher than five years ago.
The impressive progress made by Turkey in the last five years in terms of economic stability and convergence towards European standards has dramatically increased the attractiveness of the country for foreign investors, especially for European investors (in parallel with the Turkish convergence process to the European Union). FDI are booming: in 2005-2006 Turkey attracted twice the amount of FDI received in the whole previous decade.
The main driver of foreign investments in Turkey is still related to the vast potential of the local market: a population of 73 million whose income levels are increasing fast.
Turkey is the second biggest country in Europe in terms of population after Germany (excluding Russia). GDP per capita (now greater than EUR 4,200) is 80 per cent higher than five years ago. These are the findings of the latest survey published by the CEE Research Network of UniCredit Group.
Istanbul is an important gateway with enormous potential
Turkish GDP represents almost 30 per cent of the total GDP of Central and Eastern Europe (considering the ten new EU members and Western CEE-region1): hence it is a potential target for all the companies developing networks in these countries. Istanbul with its population of 12 million and an important industrial base nearby is a very special and important gateway to enter the country.
Turkey is also a competitive production location as it has strong traditions in the manufacturing sector with important chains of suppliers and strong local brands.
The automotive and basic metal industries are among the new driving sectors, with the share of the automotive industry increasing rapidly from 6 per cent in 2000 to 15 per cent in 2006 and the share of basic metal increasing from 8 to 11 per cent.
“The services sector is very strong and competitive in Turkey too, especially in the field of banking and finance, telecommunications and transport. First, the services sector is mainly aimed at serving the vast, local market, and it can take advantage of the enormous possibilities in terms of economies of scale. Second, many activities require a skilled “white collars” labour force, and this can be considered one of the main sources of strength on the Turkish labour market in the main cities”, says Yelda Yucel, senior economist at Yapı Kredi, Member of UniCredit Group.
Investments in services sectors accounted for around 90 per cent of total investments in 2005 and 2006. Financial intermediation and transport, storage and communication received most of the FDI (the share of financial intermediation and transport in total FDI being 40 per cent and storage and communication being 36 per cent in 2006 respectively). Turkey received around 34 billion euros of FDI in the years 1992-2006 (22 billion in 2005-2006). In 2007, FDI inflows are expected to continue and they will amount between 3 and 4 per cent of GDP during the year.
UniCredit Group is represented in Turkey with Yapı Kredi serving around 13 million customers in 650 branches with total assets of nearly 29.5 billion euros. UniCredit Group is by far the Number 1 banking group in CEE. With this comprehensive network around 24 million customers benefit in 17 countries from the knowledge of the products and services and get access to more than 3,000 international financial centres.
For further information on economic developments in Turkey please see the “Competitiveness Report Turkey” issued by UniCredit Group.
1) The ten new EU members considered are Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia; the Western Balkan countries are the countries of ex-Yugoslavia (Bosnia-Herzegovina, Croatia, Montenegro, Serbia) and Albania. The weight of Turkish GDP in the above mentioned CEE area (including Turkey) is 29%, or as large as 40% of GDP of these 15 countries if we exclude Turkey.
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