Results of 2010’s second Barometer Survey, which takes the pulse of YASED members unveiled
According to results of the second Barometer Survey of 2010, made among the members of International Investors Association (YASED), 37% of international investors in Turkey are planning new investments and 37% are expecting economic growth to gain speed in Turkey in the coming six months period. 41% of the members expect Turkey’s economic atmosphere to improve for international direct investments. Investors place the ‘Legal framework and enforcement of laws’ as the most negative development which affect international investments in Turkey.
The results of YASED’s Barometer Survey, which takes the pulse of the investment environment and reflects the views of international investors in Turkey on economic and political developments which affect their investment decisions, were unveiled by Secretary General Mustafa Alper. The Survey results released at a meeting held with the participation of YASED Vice Chairman Adnan Nas and Board Members, demonstrated striking information. While the proportion of international investors who planned making new investments in 2010 was 42% in the first Barometer Survey of the year, the results of the second Survey indicates that 37% of international investors consider making new investments in 2010. Whereas the ratio of international investors who expect economic growth in Turkey to gain speed in the next 6 months period was 47% in the first Survey, this ratio has dropped down to 37% in the second one.
According to the Survey, YASED members have realized their production, turnover, profitability and export targets to a great extent in the first 6-month period of 2010. Whereas 55% of the members have declared that they have accomplished their turnover targets to a great extent, 46% have affirmed to have accomplished their production targets. On the other hand, 24% of the members have noted that their profitabilities and 17% have noted that their exports have remained below their targets. While 45% of international investors have indicated that their employee numbers have not changed during the last 6-month period, 21% have reported decreases and 34% have reported increases. As for the coming 6-month period; whereas 54% of the investors expect no change in their employee numbers, 12% anticipate decreases and 34% anticipate increases.
Stable growth expectations for the world economy - Strong confidence in Turkey!
According to Barometer Survey a significant 59% of the international investors in Turkey are considering that economic growth in the world will remain stable in the next 6 months. 45% of the investors however expect Turkey’s economic growth to gain speed in the same period.
YASED’s Barometer Survey puts forth also the forecasts of investors for key economic indicators. According to the Survey, 62% of international investors expect inflation and interest rates to remain stable in the coming months. As for foreign exchange rates, while 46% of the members expect these to move parallel to the inflation rate, 50% predict that the increase in foreign exchange rates will be less than the inflation rate. An interesting result is that while 30% of the members consider that the economic environment for international direct investments will improve worldwide, a higher percentage (41%), believe that the economic environment will improve in Turkey.
The main barrier to investments is the “Legal Framework and enforcement of laws”
According to YASED members, the main enduring barriers to international direct investments in Turkey are; “The Legal Framework and enforcement of laws” by 56%, “Unregistered Economy” by 46%, and “Political Instability” by 46%. Members sort the other potential threats that might affect international direct investments adversely in Turkey in decreasing order, as; “Taxes and Incentives” by 41%, “Economic Instability” by 32%, “Corruption” and “Intellectual Property Rights” both by 28%, “Red Tape” by 15%, and “Qualified Workforce”.
Similarly, the 3 issues the government should prioritize in the term ahead, according to YASED members are, “Unemployment” by 74%, “Structural Reforms” by 56%, and “Fiscal Rule” by 38%. The most significant legal amendments our members are looking forward to in the short term have been, in order of precedence; “Turkish Commercial Code”, “Income Tax Law”, and “Regulations on Energy Market”, as in previous surveys.
YASED Investors’ Expectation Index
YASED Investors’ Expectation Index value for 2010 third quarter, compiled from YASED’s Barometer Survey and prepared by the academics of Marmara University was unveiled too. The Index information reads as; “YASED Investors’ Expectation Index has climbed to 72.38 in Q3 2010. Previously we had witnessed the Index following a recovery trend in the second half of 2009 and then entering a declining trend in early 2010. We now observe that this trend had continued in Q2, but is now entering into a new recovery phase in Q3. Accordingly, the Index has exhibited an increase of 3.4% over Q1 and of 14.6% over Q2 of this year.
YASED Investors’ Expectation Index reflects the expectations of international investors operating in Turkey for the coming term. The 10 questions that constitute the basis of the Index focus on a number of economic and non-economic aspects of Turkey’s investment environment. Investors’ expectations as to economic and political stability for the next term for instance, or taxes, incentives, bureaucratic implementations, are among the questions of the Index. When we take a look at the answers given to YASED’s Barometer Survey, which can be monitored in detail, we see improvements in almost all expectations in Q3 of 2010 with respect to the previous two quarters. We observe a significant improvement particularly in expectations on taxes, incentives and red tape. We see that although having turned quite negative at the beginning of the year, expectations for political stability have improved significantly in Q3. We could monitor a slight improvement in the political stability perception in Turkey, just before and after the referendum, also by means of other indicators. We can see in the details of the Index that expectations for the financial environment have slightly worsened once again, with reference to the beginning of the year. In conclusion, it can be observed that foreign investors’ expectations have improved in Q3 for most of the indicative factors of Turkey’s economy. We know from our previous data that YASED Investors’ Expectation Index is closely correlated with economic growth. YASED Index has exhibited a significant increase in the second half of 2009 and this move was reflected in the growth figures early this year. The drop observed in the Index in Q2 of this year was actually indicating the slowdown we are currently witnessing. The rise in the Index in Q3 again gives a positive signal for growth. But the rate of increase in the last Index, as well as its level, indicate that the growth rate will be lower than it had been at the beginning of the year.”
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