35 percent FDI drop hits Turkey’s economy
ISTANBUL - Reuters
‘The Gezi protests have affected the FDI inflow to Turkey in the short term, but I do not expect a long-term effect from the protests,’ YASED’s Özlem Özyiğit says.
Foreign direct investment to Turkey dropped by more than one-third in the first five months of 2013 year-on-year, according to the Central Bank, as the International Investors Association (YASED) noted that it would be difficult for the country to attain its target of $15 billion to $20 billion of FDI this year.
In the first five months of 2013, FDI inflows to Turkey totaled $4.22 billion, a 35 percent decrease compared to the same period in the previous year, according to data from the Central Bank. It is unlikely that Turkey will reach its year-end aims in terms of FDI inflow in light of the numbers through the first five months of 2013, YASED Secretary-General Özlem Özyiğit said yesterday at a press conference.
“Although we, as YASED members, have not revised our target officially, we believe Turkey could attract $12.4 billion of FDI in 2013, as it did in 2012, as long as a number of big volume transactions are made in the last quarter,” Özyiğit said, adding that large privatization projects in the works could help increase the FDI inflow to Turkey, such as the privatization of the national lottery, Milli Piyango. In the first quarter of 2013, $1.1 billion out of the $2 billion total FDI inflows to Turkey was composed of net foreign capital inflows while $221 million was of other capital. The remaining $719 million was of real estate purchases by non-residents.
“The decline in the FDI inflow to Turkey has mainly resulted from the slowing growth of the United States and the current financial conditions in the U.S. economy. The Gezi protests have affected the FDI inflow to Turkey in the short term, but I do not expect a long-term effect from the protests,” she said.
As of 2012 year-end, foreign direct investment (FDI) inflows to Turkey have reached $12.4 billion. In 2012, FDI inflows to Turkey decreased by 23 percent compared with 2011 in line with the global FDI flows, according to YASED figures.
Out of $12.4 billion FDI inflows to Turkey; $9.3 billion represented the net capital inflow, $416 million was other capital inflows, and $2.6 billion was the real estate acquisitions and sales of non residents in Turkey.