Vice President Cevdet Yılmaz Calls for Investment in Turkey in London
Vice President Cevdet Yılmaz made a call for investment in Turkey during a meeting held in London. He emphasized that Turkey is an attractive and safe haven for international investors. Yılmaz highlighted Turkey’s competitive business environment, strong financial system, geo-strategic location, and growing economy supported by incentives, offering significant opportunities for investors.
At the "Private Equity Investments in Turkey and its Surroundings: 2025 Outlook Conference" organized by Globalturk Capital at the London Stock Exchange, Vice President Yılmaz shared the latest developments regarding the Turkish economy with international fund managers and investors.
Yılmaz pointed out that under the strong leadership of President Recep Tayyip Erdoğan, Turkey achieved political stability by reducing uncertainties, especially after the general elections. He reminded the audience that in September last year, the Medium-Term Program (OVP) for the 2025-2027 period was implemented.
He explained that the main objectives of the program are to gradually reduce inflation to single-digit figures, increase potential economic growth in line with the disinflation process, grow production-based investments and employment, increase exports through structural reforms, and ensure a fair distribution of income across society through improved welfare.
Yılmaz emphasized that strong coordination among monetary, fiscal, and revenue policies will be ensured, and that this will be a priority in the fight against inflation. He stated, "There is a good and coordinated team effort in the preparation and monitoring of our policy documents. Policies are created and effectively monitored through high-level mechanisms such as the Economic Coordination Council."
Turkey’s Economy Expected to Grow by 3.5% in 2024
Yılmaz discussed the recent global economic developments, pointing out that increasing protectionist tendencies, uncertainties in global economic policies, and rising geopolitical risks have added downward risks to growth while creating upward pressure on inflation.
Despite these global challenges, Yılmaz emphasized that Turkey's economy has shown strong growth performance. He stated:
"We forecast that economic growth will be around 3.5% annually in 2024, close to our target in the OVP. But it’s certain that we are on the positive side, and our economy continues to grow. We also expect the national income to be at 1.3 trillion dollars and per capita income to exceed 15,000 dollars in 2024. On the inflation side, annual inflation has decreased by 33 percentage points in the last eight months, reaching 42% by January 2025. The balanced growth composition, declining current account deficit, increased confidence, improved expectations, and accelerating foreign inflows are significantly contributing to the decline in inflation. The service sector is mainly pushing inflation up. Therefore, we will focus more on the service sector in our program."
Current Account Deficit Below 1% of GDP
Yılmaz mentioned that despite weak external demand and the real appreciation of the Turkish lira, Turkey’s goods exports reached a record high of 262 billion dollars in 2024, and total goods and services exports surpassed 377 billion dollars.
He noted a significant improvement in the current account deficit, with the current account balance improving by 30 billion dollars compared to the previous year, reaching a level of 10 billion dollars in 2024. He also mentioned that the current account deficit-to-GDP ratio, recorded at 3.5% in 2023, dropped to below 1%.
Yılmaz emphasized that Turkey has been positively differentiating from many countries, noting that after the earthquake centered in Kahramanmaraş in 2023, a comprehensive development program was implemented, including the construction of 450,000 houses and infrastructure investments.
Despite the increase in budget expenditures due to earthquake-related expenses in 2023 and 2024, Yılmaz stated that the budget deficit remained at reasonable levels. The public debt-to-GDP ratio decreased to 25.6% in the third quarter of 2024.
Decline in 5-Year CDS Risk Premium Expected to Continue
Yılmaz said that Turkey’s banking sector has a strong capital structure, high asset quality, and profitability, making it very healthy. He pointed out that the sector's capital adequacy ratio is expected to be 19.7% by the end of 2024, well above the legal requirement of 8%.
He also stated that the sector does not carry currency risk due to its balanced foreign exchange position, and that non-performing loan ratios remain low at 1.8%. "A sustainable and stable credit flow is provided to the real sector. We observe that private banks are taking a more active role in providing commercial credit in proportion to their share of assets in the sector," he added.
He stated that with the political and economic stability and confidence in place, investor confidence in Turkey has increased since the second half of 2023. "During this period, credit risk premiums, CDS, significantly decreased, international capital inflows accelerated, our reserves strengthened, exchange rate volatility decreased, and financing conditions improved. The Central Bank's gross reserves increased from approximately 98 billion dollars at the end of May 2023 to about 170 billion dollars by February 21, 2025. The trend of decrease in Currency Protected Deposit (KKM) accounts continues. As of February 21, KKM has decreased to 24 billion dollars. We are gradually phasing out this temporary mechanism."
Yılmaz added that the decline in the 5-year CDS risk premium is expected to continue.
Turkey's Share of Global Capital Targeted to Reach 1.5% by 2028
Yılmaz stated that unemployment is expected to be 9.6% this year, and that the increase is part of the process of economic balance. However, he noted that after 2025, unemployment rates are expected to decrease again due to economic growth and structural reforms in the labor market.
He further discussed exports, saying: "This year, we expect exports to gradually increase as we strengthen our export-oriented growth strategy. We expect the current account deficit to GDP ratio to be 2% in 2025. During this period, the increase in export diversification and decreases in energy costs will contribute to the improvement in the current account balance."
Yılmaz also discussed Turkey’s goal to increase its share of global capital in high-quality investments. "Our main goal for foreign investment is to attract investments that support high-value, green and digital transformation, technology-driven, and skilled workforce projects. We aim to increase Turkey's share of global capital in high-quality investments from the current 1% to 1.5% by 2028."
Yılmaz pointed out that the bilateral trade between Turkey and the UK is expected to reach 22 billion dollars in 2024, and that the Free Trade Agreement is on the agenda. He emphasized that there are currently 3,204 British companies and 50 liaison offices operating in Turkey, showing strong confidence in the Turkish economy’s growth potential.
"We believe that advancing our economic relations will provide additional market access opportunities for British companies. Our goal is to increase the quality and diversity of investments and attract more value-added investments to Turkey. In this regard, priority sectors include e-mobility, green energy, life sciences, high-quality manufacturing technologies, defense, and aerospace," Yılmaz concluded.
The article continues by noting that Turkey and the UK can develop new business models to improve investment and cooperation opportunities in response to competitive pressures from the Far East, with a focus on competitive business models over protectionist policies.
In his closing remarks, Yılmaz invited foreign investors to participate in a roundtable meeting.
Source: YIRMI DORT TV