Turkey is one of the most influential countries on the planet because of its rich history, strategic location and powerful economy. From the Ukraine invasion to the relationships between Europe and the Middle East, Turkey has had a major role in every geopolitical issue in this part of the planet.

Lets see some of the most relevant business news in this country in the last weeks. 

Inflation skyrockets in Turkey

Yearly inflation in Turkey hitted 61% in March 2022, a 20-year high, as energy prices surged because of the Russian invasion of Ukraine and the post-COVID19 global recovery.

Turkey’s skyrocketing inflation also follows some interest rate cuts fostered by the government’s policy to boost economic growth, foreign direct investment and global exports. 

The Turkish Lira’s value has plummeted 44% in the last year against the dollar, a sign of the terrible currency crisis Turkey has experienced since 2018. In order to limit the impact of inflation on the middle class, the government has implemented tax cuts in fuels.

Even though the economy is passing through a hard time, remind that along with crisis comes opportunity. Lira’s devaluation has presented an opportunity to many Turkish companies, which now can increase exports to Europe because their goods become more competitive in the international market. Expats living in Turkey are also benefiting from the high inflation, as the cost of living in dollars keeps decreasing.

Turkey relies on its relationship with China to boom exports

As we have told you above, Turkey has been facing a continuous devaluation of the Lira in the last few years, as this currency has plummeted more than 50% since 2016. Despite this, the manufacturing and industrial sector are booming. The main reason: China.

Turkey is serving as a crossroad between China and Europe, buying capital equipment from China and selling finished products to the Old Continent. Some of the sectors are chemicals, steel products and house appliances. The impact in the policy is clear. Imports from China have risen more than 50% in the last 5 years, while total exports have doubled.

However, this also means that Turkey will deepen its dependence with China, reducing their leverage to act in some geopolitical issues, such as China's treatment of the Uighurs minority, a people who speak a Turkish dialect and have some costumes and ties to Turkey.

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European defense ministers to meet in Istanbul to discuss Ukrainian invasion 

British, Italian and Turkish defense ministers will meet in Istanbul to discuss the Russian invasion of Ukraine and other issues regarding ties between NATO members, the Turkish defense ministry said in April 2022.

This meeting, which will take place on April 15th 2022, is another sign of the preeminence of Turkey in the global stage. Regarding the Ukrainian crisis, this country has acted as a mediator between Ukraine and Russia, while serving as one of the last commercial ties between Russia and the West. 

One great advantage of Turkey is its economic independence, which allows them to resist pressures from the West to impose sanctions on Russia and other US foes. To date, President Erdogan has opposed economic sanctions of any kind.

Abu Dhabi investment funds are seeking to put their money on Turkey

Some wealth funds in Abu Dhabi are scouting investments in Turkey to put billions of dollars on them, Al Jazeera reported on september 2021. This is another sign of promising perspectives for Turkey in the near future, despite the currency crisis passing through the last years, and the fact that ties between Turkey and the United Arab Emirates are strengthening again after a decade of many impasses regarding Libya and Syria conflicts. 

According to sources cited by Al Jazeera, talks between the investment funds and some companies in Turkey have taken place in the last months. Ties between UAE an Turkey are warming, as in March 2022 the Emirates setted up a $10 billion fund to support investments in Turkey.

That fund will mostly focus in energy, food and healthcare sectors, a state agency reported after high level meetings between both Eastern countries, which also signed cooperation deals regarding stock exchanges, central banks and wealth funds.

What can we do for you?

History always teaches us that along with crisis comes opportunity. Turkey is not the exception. Despite the currency crisis and high inflation, the Middle Eastern country has tons of business opportunities to offer.

If you are wondering how to invest in Turkey, then we have a solution for you. Our partners in Turkey are some of the best consultants in the local market. They will help you to set up a company and even get the extraordinary Turkish passport, which will allow you to travel to more than 100 countries visa-free, through the Citizenship by investment program.

Turkey is one of the latest frontiers of financial freedom. In order to take advantage of the limitless business opportunities, request a consultation now.

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