Turkey is known by holidaymakers all over the world for its rich culture, sundrenched beaches and laid-back atmosphere but could the current state of the Turkish Lira make it a haven for investor’s as well as tourists?
Turkey is one of the most dynamic and attractive markets for UK companies. Already sizeable, the Turkish economy is predicted to be the second fastest growing economy in the world by 2018 and will out-strip those of Italy and Spain in the next decade. Turkey, with its large, young and well-educated population, is already a member of the EU Customs Union and is negotiating for full EU membership.
In the last decade alone Turkey has generated one of the most respectable GDP growth rates in the world. For the first time in 30 years, inflation has fallen to single digits, helping to accelerate growth. Its GDP per capita has tripled and has expanded into new regions and markets. Between 2009 to 2011 the country succeeded in generating 3.2 million jobs, a figure that is greater than the total number of jobs created in the entire 27 member states of the European Union combined during the same time period.
The level of early stage entrepreneurship activity in 2010 in Turkey was 8.6% which means that about 9 out of every 100 adults were entrepreneurs. This percentage has almost certainly risen further in the past three years.
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Facts and figures for businesses and investors to bear in mind:
- The ongoing EU accession talks are a key driver for the modernisation of Turkey’s economy and business environment.
- Over 2200 UK companies currently do business in Turkey.
- Turkey is expected to be the fastest growing economy among OECD members during 2011-2017, with an annual average rate growth of 6.7%.
- The UK is Turkey’s fifth largest source of imports from the EU, with a value of £2.95bn.
- A young growing population and EU funding mean there are opportunities for UK companies in a variety of sectors including, airports, environment and water, education and training, financial services, ICT, life sciences and ports.
- Turkish GDP grew by 8.5% in 2011, making the country the fastest growing economy of Europe and OECD.
Caxton FX Senior Account Manager, Philip Hoey made this statement regarding the current outlook of the Turkish lira: “The pound climbed to an all-time high against the Turkish lira in January. Although the exchange rate has fallen since then, the pound is still 28% higher against lira at the moment compared to this time last year, so a trip to Turkey is still great value.
In addition, there is growing pressure on the Central Bank of the Republic of Turkey to cut Turkish interest rates, which would drive the pound even higher against the lira. Governor of the CBRT, Erdem Basci, suggested last week that an interest rate cut may be on the cards soon, due to the improving inflation outlook in Turkey. Holidaymakers should consider buying some lira now and some closer to the time of departure, to hedge against volatility and average out the exchange rate.”