Excluding real estate, foreign direct investments turned negative for the first time. The ratio of outgoing direct investments to incoming investments exceeded 103 percent.
Turkey’s success in foreign direct investments in the first period of the 2000s is reversing. In recent years, foreign direct investment capital inflows have been on a downward trend. Excluding real estate, net capital inflows (including liquidations) turned negative for the first time by the end of 2023, and direct investment in Turkey, which can be called permanent capital net “earnings” by the end of 2023, fell “negative” for the first time.
According to the data on foreign direct investment in the balance of payments of the Central Bank of Turkey, after deducting the amounts liquidated by the companies, the amount of capital outflows abroad was net USD 5.39 billion at the end of 2023. In the same category, the amount coming to Turkey was realized as USD 5.21 billion.
As of the end of 2023, direct investment in Turkey, which can be called a net “gain” in the form of permanent capital, fell to a “minus” of USD 179 million for the first time. This is not only due to the decline in foreign investors but also to the increase in Turkish residents’ investments abroad.
Engin Aksoy, President of the International Investors Association (YASED), who announced the results of the meetings held with its members last week, pointed to the limited growth in global foreign direct investments and pointed out that the competition of countries seeking to attract such investments has intensified. He underlined that the expansion of existing investments is as important a factor as new investments.
According to the YASED competitiveness analysis study, Turkey’s competitiveness is high in terms of costs. On the other hand, in terms of risks, it was determined to be higher compared to rival countries. YASED President Aksoy noted that the success of the anti-inflation program, predictability and the legal system stand out as critical issues for investments in their survey, and that expectations have improved in the current outlook. According to the YASED survey, if Turkey improves in these areas, there is an investment potential of USD 18.6 billion according to the survey results.
Real estate is the foreign direct investment item
Direct investments in Turkey reached USD 19.3 billion in 2006. However, it began to decline steadily thereafter and has remained in the range of USD 7-9 billion since 2009, albeit occasionally exceeding USD 10 billion. During this period, the weight of real estate increased steadily in line with the decline in overall investments, and real estate purchases of over USD 4 billion per year became the main foreign direct investment item.
