Historic decline in direct investments: Turkey turns negative for the first time!

The foreign direct investment table turned to a negative value for the first time in 2023, excluding real estate. It was observed that the ratio of direct investments made abroad exceeded incoming investments.

It is noted that this change represents a shift from the period when Turkey was a leader in foreign direct investment. In recent years, a downward trend has been observed in capital inflows for foreign direct investment. When evaluated excluding real estate, net capital inflow (including liquidations) became negative for the first time at the end of 2023, and direct investment in Turkey experienced a net loss by the end of 2023.

Table, ekonomim

According to the Central Bank's balance of payments data, at the end of 2023, after deducting the amounts liquidated by companies, the net capital-qualified amount invested abroad was 5 billion 393 million dollars. In the same period, the amount coming into Turkey was 5 billion 214 million dollars. This situation shows that net investment of a permanent capital nature in Turkey has fallen into the negative for the first time. In this case, in addition to the decrease in foreign investors, the increasing tendency of domestic investors to invest abroad has been influential.

Turkey's foreign direct investments, which increased rapidly in the early 2000s, declined following uncertainties in the political and security spheres. In recent years, examples such as the suspension or redirection of some planned investments, particularly in electric and hybrid automotive, to other countries have been seen.

According to the statements of International Investors Association (YASED) President Engin Aksoy, growth in global foreign direct investment is limited, and competition among countries wishing to attract such investments is increasing. According to Aksoy, in addition to new investments, the expansion of existing investments is also important.

According to YASED's competitiveness analysis, Turkey's competitive power in terms of costs is high, but it is at a higher level than other countries in terms of risks. Aksoy noted that, according to the survey conducted, the success of the inflation-fighting program, predictability, and the legal system are important for investments, and that expectations have improved. According to the YASED survey, if Turkey achieves improvements in these areas, there is an investment potential of approximately 18.6 billion dollars.