The message is getting through that the Turkey of today is very different from that of yesteryear. The Turkey which once merely promised great potential is now busy realising that potential. The result is an economy whose dynamism is the envy of other emerging markets, as well as its other European neighbours. While this year’s growth cannot hope to compete with rates in 2010 and 2011 of 9.2 per cent and 8.5 per cent, it is hard not to agree with the evidence, presented to a recent House of Commons Foreign Affairs Committee, that Turkey has presented a picture of ‘sustained economic growth and stability’ over the last decade.
Whatever the bumps in the road, the UK Parliamentary record concluded, ‘Turkey is going to become a major regional economy.’ Indeed, the view from the high offices of Istanbul’s financial district is that Turkey has already assumed that leadership role.
In fact, the greater challenge facing firms and fund managers is not whether to buy into the Turkish boom, but how. UK Trade & Investment (UKTI) describes competition within the Turkish market as ‘fierce.’
My advice may not be impartial. It is issued in my capacity as head of one of the country’s largest banks and also as Co-Chair of the Turkish-British Business Council (TBBC). At the same time, the message is heartfelt. My belief is that rewards are there, not only for UK exporters, but also for those prepared to invest ‘smart capital’ in sectors that take advantage of Turkey’s fast growing domestic market and the Turkish business community’s deep knowledge of its greater region. In the past, much of the lure of the Turkish market was collecting the risk premium from a country struggling with reform. Now the glittering prizes belong to those who see the future and are prepared to invest in what Turkey does right.
Already Turkey’s economy is larger than that of Belgium, Poland or Sweden, and is fast approaching that of Holland. For those who still find the Turkish market daunting, there is a great deal of institutional advice and expertise, much of it provided by UKTI or the Foreign Economic Relations Board (DEIK), under whose auspices my business council operates. Much of the work of these bodies is aimed at locating fertile sectors for investment or in brokering partnerships between UK firms and Turkish partners in third party countries where synergies between skill sets exist.
A recent PricewaterhouseCoopers’ report, ‘The World in 2050,’ names Turkey as one of the E7 economies (China, India, Brazil, Russia, Indonesia, Mexico and Turkey) surpassing the current G7 countries. A recent HSBC study also forecast that Turkey would become the world’s twelfth biggest economy by 2050, with a GDP of US$2.149 trillion and a per capita GDP of $22,063.
As Minister for Trade, Lord Green, put it: ‘Formerly, CEOs needed to convince their boards to set up a business branch in Turkey. But today’s situation is the opposite. The CEOs who miss business opportunities in Turkey have to explain to their boards why.’
The irony is that while Turkey and the UK share a common understanding at the political level, British business has historically been behind the curve not only with Germany as a trading partner but also with Turkey, France and Italy. We in Turkey are partly to blame for not making our ‘brand’ better known. At last, the increased awareness of Turkey has prompted Prime Minister David Cameron to set a target of doubling UK-Turkey trade in goods by 2015 from the 2009 figure of £6.5 billion. This, we believe, is a modest goal. However, UKTI has made Turkey one of its priority markets. So, too, has independent advisory board TheCityUK , which is dedicated to promoting UK financial and professional service industries – drawn, no doubt, by Istanbul’s declared aspiration to become an international financial centre.
All this is in addition to initiatives to raise the profile of Turkey among UK business and opinion makers. Such initiatives include a CEO forum that first met in Downing Street in 2011 during Prime Minister Erdoğan’s visit. Another body, the Tatlidil Forum, brings together business and political leaders and opinion makers for regular consultation. These initiatives may have already borne fruit. Great Britain has suddenly leapt up the table to be the largest source of foreign direct investment in Turkey in the first half of 2012.
The Turkish market is not simply attractive but a fertile plain for the particular services and skills which the UK has to offer. I describe Britain and Turkey, located on opposite sides of the European continent, as providing an important axis of economic growth. In brief, Turkey is what Prime Minister Cameron labelled ‘Europe’s BRIC’: a fast expanding field of opportunity, fuelled by a young and dynamic population and an urbanising workforce eager to acquire new skills. Britain complements Turkey as a sophisticated financial centre and the gateway to Europe for many Turkish firms. It is also a node of the knowledge-based economy.
I am reluctant to speak of a Turkish economic miracle because so much of today’s prosperity is the result of past sacrifice and hard work. Turkey empathises with the eurozone sovereign debt crisis because in 2001 we faced similar difficulties. We had the perverse good fortune of having our crisis when the world economy was in far better shape. Even so, we had the sense to learn from our past and follow a prudent path.
As a banker myself, I am proud of my industry’s track record. The country’s financial sector remained highly capitalised and profitable during the 2008-9 global crisis. Turkey was the only OECD country where no explicit or implicit public sector support was extended to the banking sector. Turkish banks were fit and able to finance recovery when the time came.
Trade, peace, and prosperity are the values which underlie the strong relationship between Britain and Turkey – that and a great deal of commercial pragmatism. Indeed, the Turkish business community sees the country’s regional influence as a direct consequence of its new economic might. Turkey’s economy doesn’t depend on the price of a single commodity. Rather, it relies on sound fiscal and monetary management and on a peaceful and prosperous society. By extension, the more prosperous Turkey’s neighbourhood, the better off Turkish citizens will be. And of course, Turkey’s new strength has become an engine of Europe’s own recovery. Together, we have our shoulders to the wheel.