Foreign investors in Turkey still unsettled: YASED

Foreign investors still appear concerned about Turkey's political stability, according to the 'Barometer' survey by the International Investors Association (YASED), however the uncertainty in the country was widely thought to fade away after the Turkish Constitutional Court ruled against the closure of the ruling AKP in late July.

The survey indicated that 62 percent of foreign investors thought political instability was on the rise in Turkey and 55 percent thought the economic outlook would worsen in the next six months.

Yet, in spite of this pessimism, 61 percent of those who responded were planning new investments in Turkey, the results also revealed.

Foreign investors urged the government to focus on structural reforms to cure the current account deficit and hasten the process toward full membership in the European Union, the survey showed.

While 80 percent of foreign investors in Turkey expected the slowdown in the global economy to continue, 66 percent foresaw a stagnation in the Turkish economy.

The survey also revealed that 71 percent of international investors believed Turkey's current account deficit would increase in the next six months, while 67 percent of them expected inflation to rise. In addition, 57 percent predicted interest rates in Turkey would increase in the next six months.

WORSENING OUTLOOK
A majority of foreign investors in Turkey, some 72 percent, thought the economic outlook today was worse than last year, while 82 percent said the political outlook had worsened.

Some 55.1 percent of foreign investors in Turkey, which participated in YASED's survey, revealed that they had reached their turnover targets within the first half of the year, while 52.7 of them had met their expectations in terms of production. Also, 60.4 percent of them achieved targets in profitability and 43.3 percent of participants met their export goals during the same period.

One of the most gripping results of the survey was on whether Istanbul is ready to become a global financial center. A total of 58 percent of respondents said no, underlining the lack of infrastructure in the city.

As Turkey received $22 billion-worth of foreign direct investments (FDI) in 2007, YASED expected it to reach only $15 billion by the end of 2008.

The total amount of FDI was $9.4 billion during the first seven months of this year and Turkey is expected to face a 35 percent decline in foreign direct investments by the end of 2008.

This decline in FDI does not only depend on domestic issues, Tahir Uysal, board chairman of YASED, told reporters. A major slowdown in the global economy resulted in caution by international investors.

"While the global financial crisis started to unfold last year, despite our warnings that authorities should be quick in positioning Turkey accordingly, they preferred to be stuck on the political agenda. The result is a low growth rate, which does not please anyone," Uysal added.

"We are much more concerned about next year. In case the current global situation remains unchanged and privatizations are completed according to schedule, Turkey may receive FDI in a range between $12 billion and $15 billion next year," he also said when asked FDI expectation.