Türkiye saw foreign direct investments (FDI) exceed $10 billion (TL 307.23 billion) throughout 2023, a senior official said Tuesday, stressing indicators that signal the inflow would gain greater momentum this year.
The FDI volume in Türkiye reached $10.6 billion last year, said Burak Dağlıoğlu, the head of the Presidency’s Investment Office, charged with encouraging businesses to invest in Türkiye, citing the data published by the country’s central bank.
The data listed the Netherlands, Germany, the United Arab Emirates (UAE), Qatar, Russia, France, the United Kingdom, Ireland, the United States and Switzerland as the biggest investors in Türkiye in 2023.
Türkiye reversed years of easing policy after President Recep Tayyip Erdoğan named a new Cabinet after last year’s May elections. The new administration delivered aggressive interest rate hikes, aimed at taming inflation, reducing trade deficits, rebuilding foreign exchange reserves and stabilizing the Turkish lira.
The team is led by Treasury and Finance Minister Mehmet Şimşek and other market-friendly technocrats that Western analysts see as Türkiye’s best bet as it starts winning back foreign investments.
Foreign investors, including world heavyweights Pimco and Vanguard, began buying Turkish assets late last year in a strong signal of confidence in the new road map.
Dağlıoğlu highlighted manufacturing as the most attractive sector for foreign direct investment last year, with a share of 30.7%.
The wholesale and retail trade sector followed with a share of 17.6%, and the finance and insurance activities sector ranked third with 10.7%, the central bank data showed.
Dağlıoğlu stressed contraction in global investments in 2023, citing tight monetary policies implemented by central banks around the world and geopolitical developments as main factors.
“In 2023, direct investments saw declines ranging from 20% to 80% compared to the previous year in many emerging economies such as Central and Eastern European countries and BRICS countries,” he noted.
“However, signs of improvement in global investments have begun to emerge as of the beginning of 2024.”
Cooperation with Gulf
Referring to the momentum in Türkiye, Dağlıoğlu reported that European and Gulf countries ranked high on the list.
He particularly emphasized the growing cooperation and recent pace in relations with the Gulf region, which he says positively reflected on investments.
The last three years have seen Türkiye launch a diplomatic effort to revitalize links with several nations in the Gulf, led by Saudi Arabia and the UAE.
The normalization came after yearslong tense relations that hit trade, particularly to Saudi Arabia, where exports saw a long, steep fall driven mainly by informal embargoes on Turkish goods.
Türkiye and the UAE signed 13 agreements covering investments worth $50.7 billion during Erdoğan’s visit in mid-July as part of his Gulf trip, which also included stops in Saudi Arabia and Qatar.
“When we examine the data of the last 10 years, Türkiye stands out with investments in the wide geography covering Central and Eastern Europe (CEE) and the Middle East and North Africa (MENA), especially in the manufacturing sector,” said Dağlıoğlu.
He said Türkiye managed to attract 21.7% of manufacturing investments in the CEE and MENA regions during the last decade. At 19.1%, the country has also attracted the greatest volume of expansion-type investments since 2013, he added.