Blog: Turkey - automotive industry FDI
Dave Leggett | 21 November 2003
Turkey has been through some hard political and economic times in recent years. And recent terrorist bombings will be causing a lot of concern right now. The British Foreign Office is advising Britons not to travel to Istanbul or other major Turkish cities. Car companies with substantial investments there will be wondering about prospects for the economy of course. Instability in Turkey could throw plans off course. But there is some reason for optimism. Some analysts point out that past terrorist attacks around the world have always failed to derail economies. Economic effects tend to be short-lived. In Turkey this year economic output is up and interest rates are falling. There's been no rush so far to revise forecasts. If the Turkish Lira declines in value, that could actually help raise exports.
Will car companies look to pull money out of Turkey? I don't think they'll be in any rush to. The level of investment in low-cost export oriented operations designed to supply western Europe has been high and the fundamentals have not changed. Exports of finished vehicles to the EU are tariff free. Turkey is still a very cheap place to manufacture things. It is also a potentially large domestic market and is well-placed to build exports in the longer term to central Asian/Mid-East regional markets.
A situation to monitor closely, but no need for panic.
As long as the worst is over (and, for example, tourist areas aren't targeted by terrorists) Turkey is well-placed to continue its economic recovery. And business as usual, in the face of adversity, is the best response possible to terrorism. Turkey will probably get even more support for its application to join the EU now.
And on that upbeatish note, I'll wish you a happy and peaceful weekend from a dark and damp England that is eagerly anticipating Rugby World Cup victory against the Australians tomorrow.
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