Working toward its Vision 2023, the year the Turkish Republic celebrates its centenary, the government has championed an investor-friendly economic approach as it continues to implement major infrastructure projects, both urban and industrial.

Borsa Istanbul is pictured in Istanbul, Turkey October 13, 2017. REUTERS/Murad Sezer

Turkey has wide-ranging ambitions to change the composition of its economy. Average annual GDP growth printed at 5.6% in the 2003-2016 period. Recent official data indicates that by 2016 the local economy had more than tripled over the previous 14 years from USD236 billion in 2002 to USD859 billion.


2016 had seen USD17.6 billion of net FDI, with the figure having averaged at USD12.7 billion from 2003 to 2016, peaking at a heady USD22.0 billion in 2007, having troughed at USD1.8 billion four years earlier. In 2017, according to offical figures, FDI came in at USD10.83 billion. Encouragingly confirming a stable if not slightly rising trend, Trading Economics projects FDI of around USD16.5 billion in 2020. FDI inflows comprise around 1.4% of GDP by World Bank numbers.

Rocking boat troubles investors

Yet Turkey has been bruised somewhat by regional noise, amplified of late by escalated activity across its Syrian border. And while Ankara's international ratings have recently been maintained, foreign investors have a tendency to avoid opportunities that come with question marks.

This was confirmed in January by the European Bank for Reconstruction and Development (EBRD), itself a leading investor in Turkey, with EUR10 billion sunk across a raft of economic sectors; 2017 saw a record 51 projects worth EUR1.6 billion invested in. Yet the value was down from EUR1.9 billion in 2015 and 2016. The EBRD is keen to direct foreign investment toward Turkey, but stresses the point that stability on several fronts, such as EU relations and democratic practices at home, remained determinants of wider commitment.

For one, the EU buys close to half of Turkey's exports, and accounts for 75% of its FDI inflows. Plaudits from the EBRD went to Turkey's economic resilience to wider shocks, and a rigorously regulated and highly capitalized banking sector. The EBRD estimates Turkey's GDP growing 3.5% this year.

Borsa Istanbul

Attracting long-term investment and inculcating the idea of Turkey evolving into a global financial hub is central to the national vision. In brief, the unfolding Istanbul International Financial Center (IIFC) initiative rests on three pillars. The first is to elevate Turkey to among the leading 30 countries by financial development.

The second envisages financial services' stake within GDP reaching 6%. And finally, Turkey aims to rank among the world's top-25 financial centers.

In billing itself as a stepping-stone to the wider EM arena Turkey is also hoping for an expediting knock-on effect should the EU see a hard Brexit.

According to Anadolu Agency figures, foreign investor activity for 8M2017 had reached USD2 billion with net foreign purchases of USD280 million in stocks in August. That month the benchmark BIST100 index rallied 2.31% in lira terms and 4.29% by the greenback. Having peaked historically at 110,531 points during this bullish period, the index had gained a massive 40% YtD by end-August from the beginning of the year.

More recently, and specifically focusing on the foreign investor contingent, in January 2018 foreigners were net purchasers of Turkish equities on USD21.7 million. Faring the best among purchased stocks were defense firm Aselsan (ASELS.TI; MP) on USD41.2 million, followed by flag-carrier Turkish Airlines (THYAO.TI; OP) and white goods producer Vestel (VESTL.TI; N/C), while the financials were represented by Isbank (ISCTR.TI; MP) and followed by power enterprise Zorlu Energy (ZOREN.TI; OP).

For the month the top-five most sold stocks were petrochemicals giant Tupras (TUPRS.TI; OP) on USD88.6 million, followed by steel maker Erdemir (EREGL.TI; MP), Emlak Konut REIT (EKGYO.TI; N/C), Halkbank (HALKB.TI; MP), and gold refiner Koza Altin (KOZAL.TI; N/C).