FDI into Turkey experiences sharp decline in 2016
Terrorist attacks and a volatile political climate are taking their toll on Turkey’s FDI potential.
Between January 2015 and November 2016, foreign direct investment into Turkey experienced a 39.5% drop in terms of project numbers. Cross-border greenfield investment monitor fDi Markets has recorded 95 projects (excluding retail) in the first eleven months of 2016 compared with 157 projects in 2015.
Capital expenditure has also experienced a decline, from $6.15bn in 2015 to $3.74bn in 2016, and so has job creation, with a total of 14,400 jobs created in 2015 and 8243 jobs in 2016 thus far. The top investing source country in both years was Germany with 39 projects in 2015 and 23 between January and November 2016, which represents a 24.6% market share. The second strongest investor was the US, with 30 projects in 2015 and a market share of 19.12%.
However, US investment has fallen to only 16 projects in 2016 thus far, a 16.4% share. Investments from Japan, France and the UK have also experienced a sharp decline in terms of project numbers from 16 to five, 12 to six, and 13 to three projects respectively.
The leading industry sector in 2015 was industrial machinery, equipment and tools, with 17 recorded projects, a 10.83% market share, however, it has experienced a sharp drop to only nine projects between January and November 2016, a 9.47% share. In second place came automotive components with 16 recorded projects in 2015, a 10.19% share, which has dropped to 11 projects and a share of 11.58% in the first eleven months of 2016.
Food and tobacco, which was in third place in 2015 with 14 projects, equalling an 8.92% market share, has overtaken automotive components and the industrial machinery sector in 2016 with 12 projects, representing a 12.63% share. As 2016 has been a tumultuous year for Turkey, with frequent bombings, terror threats, escalating internal and external conflicts and the coup attempt in July, this drop in foreign direct investment does not come as a surprise.
Investment from western nations may stay frozen if the country continues to make its way towards an abandonment of the west under president Recep Tayyip Erdogan’s government.
The fDi Report 2016
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