Turkey: Hard to give up for investors

Developed and developing economies passed through a tough test with the global crisis occurring in 2008. While the USA failed to rid itself of the recession that has long afflicted it even after the crisis, the Japanese economy experienced harm far greater than that inflicted by the global crisis due to natural disasters. Meanwhile, the European Union, considered the world's largest economy, it is working as best as it can so that the worrying trend of bankruptcies does not spread Union-wide. As the above difficulties occur in developed economies where a long-term beacon of hope is yet to appear, developing economies are drawing the attention of global economic actors—credit firms most of all—to themselves with their unexpected resilience, and tendency to grow at ever higher rates in economic terms. Developing economies once considered too volatile are now paragons of stability with the steady economic order they have attained.
With the intense interest shown by the world press, Turkey has become the most popular player in this nascent league. An improvement in Turkey's credit rating was expected after the election; credit rating firm Moody's announced that it raised the scores of Turkish banks'. Adding to this positive development was the recent announcement that Standard and Poor's will be opening an office in the country. Having achieved an 8.9% rate of economic growth in 2010, Turkey continues to draw international investment and credit firms to itself with the expectation of positive growth in 2011.
Jemma Green, Vice President of Sustainable Development at JP Morgan Chase, evaluated these developments and explained how Turkey stands out from the crowd of developing countries for The Turkish Perspective.

Can we have your general observations and assessment on the Turkish economy?

It can be said to have quite a strong economy. While many countries, including developed countries, are still experiencing the negative effects of the crisis even after it, Turkey managed to emerge from the crisis with increased growth. That it had completed its integration with international markets was an advantage for Turkey in the crisis period. However, in the following period, it is expected that the integration in international markets will be accelerated and completed, and that financial markets will become deeper. The natural process for a country like Turkey, which has shown high economic growth, is securing depth in financial terms. I believe that this will be realized as the next step. Additionally, a consolidated democracy and a stable political environment are musts for the sustainability of all these economic developments.

What kind of country is Turkey for foreign investors?

Considered as a developing economy, it is a country with a quite a high economic volume. And we can say that is alluring for foreign investors in several ways. The most important thing for the foreign investor is "trust.” In this regard, with the stable position it has maintained for quite some time, it is in a position of preference in the eyes of the investor. Considering its geographical position, Turkey is a country that truly has been able to attain and maintain stability. Furthermore, because it has advantageous prices compared to a good number of markets, Turkey will be a market foreign investors will not be able to give up for a long time.

What should Turkey do to develop financial markets?

The existence of an active market is something that is needed for the current savings deficit. Secondary markets are also quite important with respect to the transformation of small savings into large enterprises. As you know, capital markets play a significant role in the distribution of capital stocks. Turkey could take the model applied in America as an example in the development of capital markets and especially the secondary market, making revisions according to
its own conditions of course. Securing financial depth is a long-term process. So long as you can keep conditions stable,
it is possible to realize this step by step. Though not as much as in the past, inflation in Turkey's economy can be cause for alarm in the coming term. To improve the investing environment, its economy must be kept under control and the focus should be on reducing inflation. There is a general election in Turkey in the days ahead. I'm sure that the country will emerge strong from the elections in terms of both the economy and stability. Personally, I don't think there will be radical changes after the election.

What do you think about the ongoing debt crisis in the European Union?

It is a difficult process that does not look like it will be resolved easily. We have time to see how much the European Union can progress in this area by itself. Greece in particular is being tested heavily in this process. The cost of the crisis, as a process that slows down both the union in general and its member countries, will be heavy. The European Union must truly be a "union” in eco-nomic terms to overcome this crisis.

Which countries will be the ones to rise and fall in the next ten years?

Brazil stands out especially. From being a country that borrowed from the IMF up until a few years ago, it became a country saying it could give loans to the IMF. There are companies working with 400% profits and productive markets yielding big figures in Brazil. It can also stand against many countries with its social policies. Brazil will thus continue its ascent in the days to come. Although it hasn't started to fall, there is China, which might not realize the rise expected of it. The rising price of goods and the increasing inflationist effect will continue to challenge China in the days ahead. The risk of it becoming a structural problem requires immediate intervention.

What is your evaluation of the region following the events in the Middle East/?

I am hopeful because of the elections that are to be held in the region. It is a natural right for people everywhere to be able to vote in a democratic fashion. While being hopeful for the elections, I prefer to be cautious. We will all wait together and see how the people will determine their own fates. Economically, Turkey is a great example for countries in the region. Turkey could be a leader in the economic sense, as there exist economic systems that are yet unconsolidated in the region's countries.

It is being said that the yuan could replace the euro or dollar in world trade. Do you think this is possible?

Yes, it's true that the dollar is experiencing a drop currently. As you know, the USA has been in recession for years. In terms of investments, the dollar is going through a risky time. But on the other hands, there are the many years of market dominance to speak of. I don't know if it will replace the dollar, but in the next ten years, we could see the rise of the East in terms of currency.

Do you think Turkey could be the tenth largest economy?

Since its founding in 1923, [the Republic of] Turkey has exhibited great progress, undergoing an unbelievable process of modernization in the meantime. A country with the potential to realize this process of modernization is also at a level at which it can achieve its economic goals.