Turkey emerging as top post-pandemic investment market

Whilst the short-term perspective of the global economy is looking disappointing due to severe contractions from the COVID-19 Coronavirus outbreak, experts suggest that early indications are showing that Turkey is an emerging market that will offer excellent investment opportunities despite the diminution.

Investment opportunities in Turkey

During an interview, Marc Faber, a Swiss investor and publisher-editor of The Gloom, Boom & Doom Report expressed that the US Dollar is likely to lose strength in the long term due to the monetary policy in the US. Therefore, there will be plenty of investment opportunities in emerging markets such as Turkey.

US Dollar and emerging markets

Precious metals and US Treasury bonds are performing well against the strong US Dollar, however the US Treasury bonds may take a downturn in the following weeks and months. Faber emphasised how the US shares hit a high in February, however, when these are compared to previous statistics, the markets in the US are extremely low currently. He went on to say that: "I think emerging markets with lower levels, including Turkey, could rise again quickly.”

Against developing currencies in the current markets, the US Dollar is very strong, but this is a situation that is expected to change. "Last year, the Turkish Lira also lost about 20% against the US Dollar. The Dollar was very strong. But when I look at the US' financial deficit and money-making, I do not believe that the Dollar can continue to be a strong currency," Faber concluded.

Coronavirus negative effects

Western economies were already seeing negative effects even before the Coronavirus hit. The emergence of the pandemic merely accelerated the economic negativity and many businesses are currently facing bankruptcy with many people set to lose their jobs.

Faber focused on the immense changes that the economic system has undergone globally, with airline businesses seeing their revenues decrease by a massive 95% and the fear that they may never return to revenue matching the previous levels. Airline businesses are some of the most effected sectors worldwide and many countries are no longer allowing flights.

Faber also went on to say that: "Some people will think that they don't need to travel. Some people will prefer to have conversations over Skype or Zoom rather than visiting their customers. People's behaviour will change." (NOTE: See Property Turkey's virtual tours)  

The advantages of the current norm

Goksel Asan, Turkey’s Presidential Finance Office Chairman, said that the new ways are set to stay in place even when the pandemic is over, and that this could be highly advantageous for the country provided the process has the right leadership in place.

Asan spoke about the significant losses in demand that has seen the world economy shrinking, something that he believes will continue for the foreseeable future and that the most important thing right now is to stay ahead of global shrinkage rates. He said: “Turkey's economy, I think, would complete the process more moderately than the average contraction of the world economy.”

He also went on to highlight how important it was that the virus was reacted to when the early cases hit, and as Turkey had seen a rather late emergence, they have been able to let businesses continue and operate for a bit longer.

Asan outlined that Turkey has an advantage as it exports products worldwide and there will probably be a decrease in world trade with Asian countries, specifically China. This will open ways for Turkey to be an alternative supplier to the US and European countries, which have previously purchased from China.

Rising export demands

Turkey’s exports increased by 13% and 2.3% in January and February respectively as they enjoyed rising demand due to the coronavirus that saw China’s production and supply chains halted. Exports were halted in March as Turkey had to close their borders with neighbouring countries such as Iran and Iraq, however representatives in the industry believe they can respond and surpass the shifting global demand after the pandemic restrictions are lifted. Asan also spoke about the importance of swap lines to keep the economy on track amidst the crisis.

The Chairman of the Central Bank in Turkey is currently in talks to discuss the new swap agreements, as well as closely monitoring the economic situation globally. He is working at how existing business alliances can be strengthened, whilst also addressing the negative impact that Coronavirus has had on Turkey.

Murat Uysal, the President of the Central Bank of the Republic of Turkey (CBRT), disclosed that the bank already has long-standing swap agreements with specific countries to assist trade in local currencies and that they are now in close contact with other central banks with the aim, “to further strengthen our cooperation and establish new swap agreements.”