DTurkey presents a mixed picture both politically and economically. On the one hand, there is an unstable policy with an inflation rate of as high as 20% and a dizzying depreciation of the lira. On the other hand, there is a high growth rate and rising export income.
The results of a recent survey conducted by the German-Turkish Chamber of Foreign Trade on German companies operating there show that this dichotomy is also obvious. Germany is Turkey’s largest trading partner and the most important export destination. Perhaps the results can be summarized as follows: optimistic in the short-term, optimistic in the long-term.
Economic assessments are particularly negative. Although the GDP growth rate in the second quarter was 21.7%, these companies remain skeptical. One-third expect the situation to get worse, and 40% hope the situation will remain as it is. Coronavirus-related travel restrictions, logistics and supply chain gaps, and investment delays caused by the coronavirus pandemic are slowing growth.
The chairman of the Chamber of Commerce Markus Slevogt believes that there will be “economic and political question marks” in the next 12 to 18 months. The election will be held in Turkey in 2023 at the latest. President Recep Tayyip Erdogan, who is under pressure, wants confirmation.
Opportunity to enter the market at a low price
Companies organized by the Chamber of Commerce represent 7,500 German companies operating in Turkey, complaining that exchange rate development risks, fluctuations in economic and political framework conditions, and explosions in raw material and energy costs are the biggest business risks.
For F+’s birthday, you only need to pay 3 Euros a month to read all articles on FAZ.NET.
But they will not let this ruin the good mood of good business conditions and promising prospects. The reason is that most German companies operating in Turkey are exporting. Domestic inflation that worries the public is more likely to benefit exporters because the cost of lira in euros and dollars is falling.
As Thilo Pahl, member of the executive board of AHK Turkey, said, a positive evaluation encourages companies to invest more. The latest example is the pharmaceutical company Boehringer Ingelheim, which hopes to establish a joint production with Abdi Ibrahim Pharmaceuticals, Turkey’s largest pharmaceutical manufacturer, for 150 million euros. Volkswagen cancelled a $1 billion investment last year.
Expansion of production goes hand-in-hand with the search for professionally qualified workers. According to Slevogt, this is also a problem in Turkey. Since the lira has only depreciated against the euro, it has fallen by 28% in the past twelve months, and because Turkish real estate, factories and stocks have become cheaper, investors also have the opportunity to enter the market cheaply. Slevogt mentioned the example of the Spanish bank BBVA, which wants to take over the Turkish bank Garanti completely for 2.25 billion euros.
