Hacer Boyacıoğlu - ANKARA
Greenfield investments in Turkey are on the verge of a boost due to a sharp increase in capacity utilization, Development Minister Lütfi Elvan has told daily Hürriyet.
“Those who had planned completely new investments in Turkey have been in a ‘wait-and-see’ position for the past three years. But an increase in capacity utilization will bring in additional new investments,” Elvan said, noting that the ratio for utilization increased to 78.8 percent on average between May and July, the highest this year.
Capacity use in the automotive sector, a key industry for the Turkish economy, has reached 87 percent, he added.
“Normally, when [this figure] reaches 80 percent or more an additional investment is needed,” Elvan said.
The same “wait-and-see” approach also applies to consumers, he noted.
“Consumers also tend to wait for some time and then a boom comes. We expect an increase in investments,” Elvan added.
The Purchasing Managers’ Index (PMI) is at its highest rate for the past 43 months, he also noted.
“We therefore think completely new investments will increase in the second half of 2017 and in 2018,” Elvan said, adding that loans from the government’s credit guarantee fund (CGF), which opens credit windows to SMEs, contributed seriously to the economy this year, supporting companies that need business capital.
“The size of the CGF has reached 201 billion Turkish Liras,” he said, highlighting that around 97 percent of these loans were for business capital.
Turkey’s growth figures so far this year are already above projections, as the second quarter figure is expected to hit 5 percent, surpassing growth in the first three months, Elvan added.
The government had targeted an overall growth rate of 4.4 percent by the end of the year.
The growth forecast will be revised in the new medium-term program, which is expected to be announced later this month, Elvan stated.
Moody’s recently raised Turkey’s 2017 growth forecast to 3.7 percent from 2.6 percent, projecting an average of 3.2 percent growth next year.
The inflation rate will fall to around 7 percent in the first months of next year, Elvan predicted.
In July, Turkey’s annual inflation rate dropped to 9.79 percent, its lowest level in six months, down from 10.9 percent in June.