Turkey has sent positive messages to foreign investors and signaled a shift toward a more balanced economy through some significant changes.
The country recently replaced the head of the Central Bank and appointed a new treasury and finance minister.
On Wednesday, President Recep Tayyip Erdogan said Turkey will be holding a series of meetings with international investors to discuss opportunities, potential, and the support the country will extend to them.
Erdogan also said the country is set to make structural reforms to improve the investment environment, increase the depth of the financial markets and the quality of public revenues and expenditures, and to prevent informal economy.
Experts see these new developments in the economy as positive steps for giving the green light to foreign investors.
Speaking to Anadolu Agency, Enver Erkan, an economist at Istanbul-based private investment firm Tera Yatirim, underlined the importance of Erdogan’s statement in restoring the market confidence.
Recent changes in the management of the economy point to a radical shift in policies to be implemented, Erkan said.
“In this period, taking more hawkish and sharper steps in monetary policy and keeping communication strong with an emphasis on coordination between fiscal discipline and financial policies are welcomed by markets,” he said.
Erkan stressed that reducing inflation should be the government’s top priority.
“To achieve this goal, it’s vital to adopt a market-friendly [approach] and prioritize structural reforms in the long run along with taking short-term actions,” he said.
According to the latest data released by the Turkish Statistical Institute, the country’s annual inflation rate in October was 11.89%. As laid out in Turkey’s new economic program for 2021-2023, the country’s inflation rate target for this year is 10.5%. The Turkish Central Bank forecast that year-end inflation for 2020 will be at 12.1%.
Turkish assets gained ground following Erdogan’s speech, Erkan said, noting that decision-makers should support the goodwill messages with actions in the shortest time.
“The first important test will be the Central Bank’s interest rate decision on Nov. 19. The market is waiting for more precise and orthodox monetary policy steps,” he noted.
Interest rates should be at a point that will create an additional tightening effect and strengthen the real returns, he said.
Ferhat Yukselturk, the managing partner of Istanbul-based eCons Consulting, said that today, once again, we see how communication and managing the expectations in the investment environment has been successful.
Economic parameters recovered, thanks to the announcement of targets through a transparent approach, Yukselturk said, and added: “An appreciation in the Turkish lira despite no interest rate hike being made yet showed the strength of communication.”
“The most important pillar of the economy is to give the right messages to the market.”
The Treasury and Finance Ministry and Central Bank should also use communication effectively, he suggested.