Declining wealth in Turkey
The total wealth held by people living in Turkey has been decreasing, according to various recent reports. Although these reports use different criteria to define wealth, the basic picture is clear: Both private and public wealth is in decline. Some details of the reports have signaled a number of alarming trends for Turkey.
The total private wealth held by people living in Turkey declined by six percent in 2017, a recent report by the Johannesburg-based New World Wealth has revealed.
“The total wealth held in Turkey was down by six percent in 2017. The total wealth held in Istanbul was also down by a similar percentage during the year,” New World Wealth head of research Andrew Amoils told Hürriyet Daily News on Feb. 27.
“The total wealth held in Istanbul is $197 billion, and is ranked 85th worldwide... The total wealth held in Turkey as a whole is $780 billion, and [Turkey] ranked 30th worldwide. The total wealth held in Ankara is $45 billion,” he added.
Nearly 6,000 high net-worth individuals (HNWIs), holding net assets of at least $1 million, left Turkey in 2017, according to a previous report released by the same company at the end of January. This was the second straight year that over 5,000 such individuals left the country.
Turkey ranked third in the outflow of such individuals, after China and India, according to the report.
‘Not producing many new HNWIs’
The outflows of HNWIs from China and India are not particularly concerning as they are still producing far more new HNWIs than they are losing, read the report.
“Turkey experienced a significant outflow of HNWIs in 2017. This is the second straight year that over 5,000 HNWIs have left the country. These outflows are very concerning as Turkey is not producing many new HNWIs to replace the ones that are leaving. As a result, the total number of HNWIs living in the country is declining all the time,” the report added.
There are many reasons for this trend, from a series of bomb attacks to a failed coup attempt. But there is also another factor to dicuss that goes back to an earlier date.
Turkey’s per capita wealth
According to a recent wealth report by the World Bank, the change in wealth between 1995 and 2014 has been fairly mixed, with some countries showing great gains and others lost ground, especially after the 2009 financial crisis.
In a report titled “The Changing Wealth of Nations 2018,” the World Bank tracks the wealth of 141 countries between 1995 and 2014 by aggregating natural capital (such as forests and minerals), human capital (earnings over a person’s lifetime), produced capital (buildings, infrastructure, etc.) and net foreign assets.
Human capital was the largest overall component of wealth while natural capital made up nearly half of the wealth in low-income countries, the report found.
In Turkey, per capita wealth stagnated, increasing only 2 percent between 1995 and 2014. This trend was mainly seen in low-income countries in this period, but not in countries with higher income levels like Turkey.
This trend in Turkey was the result of a gradually increasing burden of external debt, from 5 percent of wealth in 1995 to 13 percent in 2014, a decline in natural capital, which constitutes a large share of wealth, and slow gains in other assets, according to the report.
These figures show that a discussion needs to be had.