YASED takes the pulse of international investors and announces the results of 2011’s First Barometer Survey
 International investors’ greatest concern is a new global and local financial crisis

International investors expect economic growth in Turkey to remain stable for the next 6 months. They believe that the economic environment for Foreign Direct Investments in Turkey will improve, and plan to make new investments. However, they see any economic fluctuations in Turkey caused by a possible new global financial crisis as having extremely negative effects on these investments.

The results of the YASED Barometer Survey were made public by YASED Secretary General Özlem Özyiğit. The Survey takes the pulse of international investors in Turkey and includes assessments of the economic and political developments that affect their investment decisions. Announced jointly by YASED Deputy Chairman Adnan Nas and YASED Vice Chairman Dilek Yardım, the results of the first Barometer Survey of 2011 are impressive. Foreign investors are most apprehensive about the possibility of a new financial crisis in the international market. The Survey reveals a secondary concern over domestic economic and political fluctuations. Other subjects preoccupying investors are incomplete structural reforms, lack of sustainable growth, and slowdown in EU negotiations.

As in previous surveys, YASED members see unemployment as a priority for the government. Sustainable growth and the current account deficit are two problems seen as more pressing compared to last year. While 50% of the respondents say that the number of their employees increased in the last 6 months, 50% predict that the number will remain the same in the next six months.

YASED members indicated that during the last 6 months their production and turnover figures exceeded their projections, and their profit and export targets were realized to a substantial degree. These results show a more positive picture compared to the last Survey. Furthermore, the percentage of respondents who predict that growth world-wide and in Turkey will remain stable in the near future has increased, and the percentage who expects an increase in growth has decreased. The 4.75% increase in Gross National Product predicted for 2011 in the previous survey climbed to a 5.23% increase for 2011 in this survey.  Most YASED members expect increases in inflation and interest rates. According to the results of 2011's First Barometer, most investors expect the exchange rate to increase either parallel with or slower than inflation.  

Investors predict that investments in 2011 will be made primarily in the energy sector. Other sectors where they expect investments are automotive, banking and financial services, fast-moving consumer goods, R&D, pharmaceuticals, information and communication technology, and tourism.

According to the international investors who express a positive opinion about the new Turkish Commercial Code, the main barriers to international investments in Turkey are the enforcement of laws, lack of legal assurance, and the unregistered economy. In order of importance, the other barriers are inadequate tax and incentives policies, political and economic instability, and intellectual property rights.

The YASED Investors' Expectation Index

Prepared by academicians from Marmara University and compiled from YASED Barometer Survey, the first quarter rates of the YASED Investors' Expectation Index have been revealed. 

The Index includes the following statements. "In the first quarter of 2011, the YASED Investors' Expectation Index was given a rating of 75.06. We see that the Index, which showed a recovery in the second half of 2009, fluctuates but is still higher than when the global economic crisis started in 2008 and when compared to 2010's average. While the Index has increased 7.2% since the first quarter of last year, it has decreased 5.2% since the last quarter of 2010.

Looking at the details of the responses to the YASED Barometer Survey, we see that investors were significantly more optimistic in the third and fourth quarters of last year. However, this optimism declines in the first quarter of 2011. The biggest factor in this decline is an increase in investor pessimism about the financial climate. Investors consider the possibility of a new financial crisis in the international market to be the biggest risk. Since the beginning of this year, financial markets have been adversely affected by both unfavorable economic developments in the EU economy and geopolitical developments in North Africa and the Middle East. For this reason, investor sensitivity to developments in the financial market is understandable. The Central Bank emphasizes financial stability in addition to monetary stability, and this matches the concerns of international investors. In any case, we see that the investors' perceptions of improvements in Turkey's economic and political stability and its institutional structures haven't changed lately, and their expectations of stability remain largely the same.

We know from past data that the YASED Investors' Expectation Index has an important correlation with economic growth. The Index growth was higher than in the same term of last year, and indicated that it would maintain its strength into the first quarter of 2011. In spite of this, the Index actually declined from the previous quarter to the beginning of 2011, signaling that the next quarter’s growth will slow down. In this situation, it seems that the length and dimension of the fluctuations in the financial market will determine whether this signal will get stronger.”