Why is capital fleeing from Türkiye?

According to the international group Tasnim news agency, the economic crisis and increasing inflation continue in Turkey and with Erdoğan promised that he would attract foreign capital to his country, but now the reverse process has happened. Turkey still suffers from a currency deficit and banks and big investors are hesitant to enter this country. But the worse thing for Erdogan’s government is that the capital outflow from Turkey is increasing day by day. Now every US dollar is worth 33 liras in Turkey, while 12 months ago and before When Erdogan became the president for the third time, the dollar was at the limit of 20 lira. Image/1403/02/30/1403023016320210930078794.jpg”/>
Erdogan promised that in the medium term, the country’s economic crisis will be resolved. But now, his deputy, Judet Yilmaz, has announced that the single-digit inflation will last until the second half of 2015.

The dollar is coming The dollar is going away

In the past few months, the limit of foreign investment in Turkey has decreased. Net inflows in the January-March period were only $287 million. Meanwhile, during the same period last year, this surplus was 1.2 billion dollars.

The decline in foreign direct investments continues. Against 287 million dollars of inflows, 224 million dollars of capital outflows were also recorded, and this is bad news for Mehmet Shimshek, who expected multi-billion dollar investments. Net investment and direct international investment. The net investment out of Turkey was 560 million dollars and the net inward investment was 336 million dollars.

In investment items, which is an international economic index, the outgoing investment was 628 million dollars and the remaining inward investment was 602 million dollars. Is. All this shows the fact that some industrial owners and large commercial and production groups have preferred safe European markets over Turkey.

Decreasing investment in real estate in Turkey
Investment in Turkey has attracted attention due to investment in real estate. But this sector has also weakened and now no one is looking to build and buy housing.

The amount of real estate investment in Turkey in March was 236 million dollars. This figure has reached 796 million dollars in the period from January to March 2024. But in the same period of last year, it was 1.4 billion dollars.

Turkish housing companies are now engaged in the markets of Europe, Africa and the Caucasus, and their investment of 1.2 billion dollars abroad in 2023 indicates It is that they don’t consider the domestic market as safe and profitable. 23/1402082314150418728766564.jpg”/>
Turkish economic analyst Ebrahim Kavechi wrote about Turkish Treasury Minister Mehmet Simsek’s claims about the country’s economic recovery: “Mr. Minister is not lying. But he hides a part of the truth and plays with statistics to pretend that everything has improved. But the number cannot be hidden. Our official statistics have shown that, with the exception of the energy and gold market, there has been no improvement in Turkey’s foreign trade, and by the way, we have had a new foreign exchange deficit of $5.2 billion. Let’s not forget that the import and export of gold and energy do not reflect economic activity. Therefore, the actual course of action is the external deficit and the current account deficit excluding gold and energy. Tomorrow, with the increase in energy prices, the current account deficit will explode again, and as Mehmet Shimshek said, this situation will never, ever be sustainable. The external deficit decreased from -$120 billion to -$93 billion, resulting in an improvement of $27 billion. However, this improvement was driven by a $32 billion drop in gold and energy imports. In fact, when the figures related to gold and energy are left out, we see that we have had a deficit of 6.5 billion dollars in foreign trade, and the gap between the import and export deficit is getting bigger and bigger.

Turkish economic analysts They say, despite the announcement of the so-called economic austerity package, the trend of crazy consumption continues in the Turkish market, and the annual import of consumer goods has increased from 36 billion dollars to 50.9 billion dollars. The import of consumer goods increased by 14.9 billion dollars, equivalent to 41.3 percent, during the period of interest rate increase, which has a tangible negative effect on the lives of Turkish citizens. In criticizing the economic policy of the Erdogan government, Kafeh Chi said: “In a country With a collapsing education system, the only way to calm the market is to give incomplete information and play with numbers. Unfortunately, the Justice and Development Party has become a party that has brought our economy to structural destruction by completely stopping the development process of Turkey. Tolerating this situation is very painful and serious”.

High taxes, high inflation
Turkey to As a country that lacks fuel and energy resources, it buys more than one hundred billion dollars of oil and gas annually, and this issue imposes a heavy burden on the country’s budget. Tax revenues. At first glance, taking taxes means that the government will have more facilities to fund the administration of the country. But the fact is that the tax increase reflects inflation and the low-income sections of the society are in a more difficult situation. This year, the tax revenues of Erdogan’s government increased by 113% and reached one trillion and 344 reached billion lira. In particular, domestic taxes or an increase of 150% reached 591 billion liras. Also, domestic value added tax increased by 216 percent. Meanwhile, according to the Turkish State Statistical Organization (TUIK), the inflation rate in this country is still 69%. (Experts and independent think tanks believe that the real figure of inflation is more than 89 percent). /1403/02/30/1403023016311246830078764.jpg”/>
Faculty of Economics, Koç University, Turkey, recently announced the results of “Inflationary Expectations Survey (TEBA)”. According to this survey, Turkish citizens think that prices have increased by 119% from April 2023 to April this year.

In conclusion, most Turkish economic analysts believe that in addition to important problems in foreign policy Erdogan’s government, which has caused foreign investors to not accept the risk of entering the Turkish market, there are two other important issues: first, there is no certainty about the political stability of the Turkish government. The second is that the Turkish judicial system is not independent and the courts are willing to follow the request of the government and the ruling party to eliminate the requirement of equal and fair competition for private sector investors, and this is the issue that American and European companies are afraid of.

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