Foreign Investment in Turkey between January and April 2024

With a foreign investment stock reaching $264 billion by December 2023, Turkey commands a 1 percent share of global investments. As the nation sets its sights on attracting $70 billion in investments between 2024 and 2028, international discussions ensue regarding the feasibility of this ambitious goal.

Recent developments indicate that Turkey may well surpass these targets. During the period from January to April 2024, there has been a notable surge in investment inflows, exceeding initial projections. Notably, $10 billion in investment was attracted within just four months, alongside an $8 billion public purchase of TL.

These developments have had a positive ripple effect on the value of the Turkish Lira. Simultaneously, a downward trend in inflation has been observed, further bolstering investor confidence. Total foreign investments during the first four months of the year surpassed $10 billion, indicating a robust appetite for Turkish assets.

Upgrades in Ratings by international institutions

International entities such as Wells Fargo, Goldman Sachs, and Citi Bank have underscored the appreciation of the Turkish Lira and the attractiveness of assets within Turkey. This appreciation against other currencies not only aids in curbing inflation but also enhances the country's appeal to foreign investors.

Moreover, upgrades in ratings by international institutions serve to fortify the nation's stance against inflation and steer foreign investment towards Turkey. These developments paint a promising picture for Turkey's economic outlook and its ability to attract significant investments in the coming years.

Predictions for the next two years

Forecasting a promising trajectory for Turkey's economic landscape, analysts anticipate a surge in portfolio inflows coupled with a reduction in current account deficits over the next two years. These projections are bolstered by expectations of declining inflation rates and a decrease in dollarisation within the economy.

In a recent statement, S&P highlighted their revised outlook, expressing confidence in Turkey's economic stability. The agency has upgraded the transfer and convertibility assessment from "B+" to "BB-," indicating a reduced risk of the sovereign impeding private-sector debtors from servicing foreign currency-denominated debt.

Moreover, the agency emphasised that progress may unfold gradually, with reserve accumulation expected to be modest. This cautious approach is attributed to the central bank's efforts to curtail depreciation of the Turkish lira.

A growing confidence in Turkey’s economic resilience

However, the agency underscored the potential for further rating upgrades contingent upon sustained improvements in balance-of-payments outcomes, a continued decline in inflation, and an increase in domestic savings denominated in Turkish Lira. Such developments could lead to a rebuilding of the government's usable foreign currency reserves, further solidifying Turkey's economic position on the global stage.

Overall, these assessments reflect a growing confidence in Turkey's economic resilience and its potential for sustained growth in the coming years.