In 2015, Turkey attracted $16.6bn in FDI, a sharp jump from the previous year’s $12.5bn, and $12.4bn and $13.2bn in 2013 and 2012, respectively. In the first four months of 2015, FDI decreased by 23% compared to the same period in 2014. However, as the year went on, figures jumped, with July alone seeing $3.06bn in FDI. The fluctuations were to an extent linked to the country’s election cycle and related issues of projected stability.

In the first months of 2015, Turkey saw a massive decrease in interest from EU countries, traditionally its biggest investors, with FDI from EU countries not surpassing $439 million per month and falling as low as $170 million one month. Over this time period, FDI figures were led by Asian countries, however, a massive upsurge in FDI from EU countries, later in the year, redressed the balance, with $2.9bn coming from EU countries in July alone. By the end of the year, 65.7% of FDI had come from European countries, 13.3% had come from countries in the Americas, and 21.0% had come from countries in Asia. Of the Asian countries, Gulf countries’ proportion of FDI decreased slightly, even while actual FDI amount increased slightly, while FDI from Middle Eastern countries dropped notably. However this was made up for by FDI from other Asian countries more than doubling in real terms.

The service sector saw the greatest input of foreign capital at $6.2 billion, followed by the manufacturing and energy sectors in 2015. However, the energy sector led the way in the first half of the year, attracting $1.27bn of equity capital entering the country, followed by manufacturing with $1bn. EU countries invested heavily in financial intermediary institutions in July, following the indecisive June election, which led to an economic downturn, with investors likely seeing opportunities in the struggling economy.

Top FDI Sectors (2015)

  • Service sector
  • Manufacturing
  • Energy

Of total FDI in 2015, $4.1bn was in real estate, dropping from $4.3bn from the previous year, but a significant increase from 2012 and 2013, which saw $2.6bn and $3bn, respectively. As a proportion of total FDI, in fact this figure is closer to 2012 and 2013, where real estate represented 19% and 25% of total FDI, respectively, while in 2014 it represented 35%.

The analysis of the three biggest ratings agencies sees Turkey as still having much to offer foreign investors. However, political risk, exchange risk and potential difficulties attracting FDI are looming problems. Difficulty attracting FDI could have a ‘domino effect’ on the Turkish economy, worsening exponentially, very quickly. Consequently, the outlook assigned by two of the three was ‘negative’. Nonetheless, at the end of 2015, the big three ratings agencies had all maintained their ratings. Fitch gave a BBB- rating and a ‘stable’ outlook, Moody’s a government credit rating of Baa3 and with a ‘negative’ outlook, Standard and Poor’s giving BB+ but also with a ‘negative’ outlook.