The dreams of President Tayeb Erdogan include the construction of Türkiye from the “regional economic center to a global economic power” and its strengthening from the sixteenth of the world’s largest economy to the first ten.
On the shorter period, the twelfth development plan in the country of the two continents (2024 to 2028) aims to improve “its international position, enhance prosperity and combat inflation while preserving strong and sustainable public finances.” This goal will be partially dependent on the success of its foreign direct investment strategy aimed at greatly enhancing foreign direct investment in all fields. The aim is that Türkiye represents 1.5 % of global foreign direct investment and 12 % of foreign directly regional investment by 2028.
With the start of 2025, how much is everything?
If direct foreign investment is the main criterion, not good.
The full year numbers for 2024 have not yet been issued, but they are likely to be close to the previous year of 10.6 billion dollars, a decrease of $ 13.7 billion in 2022, and far from the peak 2007 of $ 22 billion, and shy of 14 billion Dollars hope earlier. This is less than 1 % of GDP, compared to 3 % in 2007 and much less than policy makers.
“Foreign investors do not like inflation by 85 %,” said an investment fund based in the United Arab Emirates. “Continuous inflation has hindered foreign direct investment in Türkiye.”
Inflation and financial challenges
Turkish policy makers have succeeded in restoring some stability to the country’s economy by reducing inflation through restricted monetary and financial policies, albeit with a blow to the government’s popularity.
Last March, local elections gave the ruling Justice and Development Party (AK) only 35 % of votes compared to 52 % in the national elections in the previous year; Erdogan is now tracing the CHP opposition Party (CHP) in current opinion polls.

“In the months since June 2023, when a new political team led by Finance Minister Mohamed Simsik, Vice President Cevdet Yilmaz, and the performance of the Central Bank of Turkey (CBT) made a sharp shift from unconventional policies, there were many positive steps towards rationality. Ravek Selim says, Economic expert in Turkey at the European Bank for Reconstruction and Development (EBRD).
EBRD expects that Turkey will publish the GDP gain by 2024 by 2.7 %, as it rises to 3 % in 2025. Special consumption will be the largest loser as politicians focus on increasing the growth -led growth growth higher than a low percentage of 20 % of GDP Total.
Limiting spending is still difficult. The financial deficit was 2023 5.2 %, and the level of 2024 is expected to be similar despite services and tax height discounts. The main perpetrator is the spending on the earthquake. Ankara adhered to about $ 30 billion annually to help societies recover from the February 2023 earthquake, which left several million displaced persons in southern and central Türkiye.
However, the unprecedented reconstruction of homes and infrastructure should lead to growth.
“Without the earthquake, the deficit will be 1.1 %, which is not really bad,” says Selim.
Economy re -balance
The latest inflation numbers are moderately encouraging; 2024 ended with an annual rate of 44 %, much lower than expected, thanks to low food prices.
The bank analyst says, “The inflation will continue this year, given the CBT signal that it will maintain.” We expect inflation to decrease to less than 30 % by the end of 2025. “
The current account deficit has narrowed about $ 10 billion in an increase of $ 2023 by $ 60 billion, allowing the rebuilding of foreign exchange reserves that made Türkiye less dependent on external flows.
“Capital flows were good. Every issue of bonds and the last SUKKUK were three or four times exaggerated while the returns had decreased, indicating a decrease in risk perceptions.”
Classification agencies. Last year, Fitch Ratings upgraded the sovereign debts of Turkey- along with a group of Turkish banks- from B-to B+ in March and then to BB- in September, when it became the only country in 2024 until this point to receive a promotion from all three classification agencies .
“To some extent, we went back to where we were in 2021, before the unconventional policy methods that led to a dramatic deterioration in expectations,” Eric Arisby, the chief director and head of the emerging European sovereignty in Vitch.
Arisby says the short -term growth forecast in Türkiye reflects the constant restoration of the economy, which will take time to give sticky inflation. With the absence of this year’s elections, the decrease in the dollar, the rise in Forex reserves, and the expected decrease in the financial deficit as all the earthquake spending is all encouraging signs.
“Türkiye has the ability to grow,” says Arisby. “We expect 3.5 % in 2026 and 4 % a year after that without creating other economic distortions. But this is a multi -year story, where the economy is re -calibrated to produce a sustainable higher growth environment” and realize the export capabilities in the country and the capabilities of foreign direct investment.
Renewable energy and EV growth
Ahmed Burak Dagliogco, head of the Republic of Investment Office in Türkiye, says that the new foreign direct investment strategy will give priority to the least developed areas, infrastructure and renewable energy.
He adds: “The goal of attracting investments that contribute beneficially to the goals of Turkey’s development,” including “green transformation, digitization, high -value services and deeper integration in global supply chains.” These priorities “will help Türkiye move forward in a competitive global market.”
BYD manufacturer for Chinese electric cars to build a billion dollar factory in Turkey is just a kind of encouragement that the government wants because the EV sector is one of the fastest growth in the country. TOG has turned the Turkish car product for cars more than 50,000 vehicles. EVS is expected to represent 30 % of the total car sales by the end of this year.
It should also be noted that energy security has always been a source of concern, is the government’s commitment to renewable energy sources. “Türkiye will invest more than $ 100 billion by 2035 to increase its renewable ability and update its infrastructure,” says Dagliogku. “This extensive investment plan highlights Türkiye’s fixed dedication to achieve its pure goal, while ensuring energy security and economic growth.”
Meanwhile, Türkiye is working closely with EBRD and other multilateral development lenders. Last year, EBRD adhered to about $ 22 billion, and invested in approximately 500 commercial facilities.
“No, this is not an accident,” says Salim EBRD. “We and Turkey have large and digital aspirations and connection and wherever projects grow, as far as half of our wallets are in sustainable infrastructure. We want to increase the expansion of green energy in Turkey, and five cities here are now part of our green city program.” EBRD also works with banks. The other on issues related to the issuance of green bonds and the encouragement of Turkish companies in the private sector to move to the carbon low track.
Horizons 2025
The additional promotion to the degree of investment by the classification agencies will be a big step towards achieving Erdogan’s ambitions wider 2028.
“If you look back over the past eight years or so, there is always something that frightens investors and threw things about the right track,” Selim notes: “Attempt to coup, elections, Kovid, Russia’s invasion of Ukraine, more elections. Investors are looking for certainty At least the policy, for example, is a three -year period. This is essential if Turkey has to perceive its capabilities from the annual growth by 4 % to 5 %.
In the long run, these capabilities are huge, and the private sector in Türkiye has a great adaptation capacity, says Arpetes Fitch. However, “it takes some time to re -establish macro’s credibility and to drown this with investors.” Many factors behind Türkiye’s capabilities are at risk, including its geographical location, the possibility of taking a blow to the increasing definitions, and exposure to changes in investor morale.
“Many factors go beyond Türkiye’s control – not the least of which is the current liquid international view,” he noticed.
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