Many foreign businesspeople do not much care whether Turkey will become a full member of the European Union, as they continue to see great potential for growth in the economy, according to a survey conducted by the Economist Intelligence Unit.
The survey, prepared ahead of the "17th Business Roundtable with the Government of Turkey" on June 23, in Istanbul, showed 37 out of 100 international businesspeople think Turkey has growth potential similar to that of China, Russia and India. Just 32 percent of those surveyed, who include chief executives or regional directors of global companies, thought EU membership was crucial for Turkey, while the majority said the biggest risk for Turkey was "macroeconomic instability."
Those surveyed also thought the response of the government toward the crisis was "slow" and "inadequate." The businesspeople said the government should close the current account deficit and seal a deal with the International Monetary Fund, instead of taking measures to stimulate demand.
Eighty-four percent of those surveyed represent companies which have annual turnovers of more than $1 billion, while only 40 percent represent companies that are based in Turkey. More than half are chief executives, members of company boards or regional executives.
Turkey has become the first step in a similar string of surveys, according to Delia Cohn, president of the Economist Intelligence Unit, or EIU. "We asked about the long-term potential of Turkey," Cohn said. "We wanted to look at how companies were doing in the midst of the crisis, also wishing to see whether their outlook on Turkey has changed or not. There were a lot of question marks on Turkey even before the crisis. But we were surprised at some of the results."
The proportion of those who said Turkey had a business potential similar to that of China was "impressive," according to Cohn. "Until some time ago, Turkey was a country that foreign companies entered during good times and exited during bad times. So, I was surprised at these results."
Relations with IMF
Turkey and Eastern Europe constitute a "success story" for the IMF, Cohn said. "Due to this success story, I think the IMF wishes to continue its relationship with Turkey. For many years, Turkey did as was told by the IMF, seizing a serious rate of growth as a result."
The EIU predicts a 4.5 percent contraction for Turkey this year and 1 percent growth in 2010, Cohn noted.
Even before the crisis, foreign investment inflows to Turkey had slowed, the EIU chief said. "Previously, privatizations were of key importance for foreign inflows. But now many assets have been privatized and one has to look into investments in other areas. Turkey's position vis-a-vis foreign investors will appear now."
According to the EIU survey, 57 percent of businesspeople said Turkey ranked among "second-class developing markets," while more than 30 percent thought Turkey may be as effective as Russia, India and China with its long-term growth potential. 8 percent said Turkey differed little from other developing countries, while only 1 percent said their company would not give priority to Turkey.
Seventy percent of survey participants said Turkey's biggest advantage was the size of its domestic market, while 65 percent emphasized its young and growing population. More than 60 percent pointed toward Turkey's position between Europe and the Middle East, while only 33 percent of those surveyed thought possible membership to the EU constituted an opportunity.
The 17th Business Roundtable with the Government of Turkey, organized by The Economist magazine, will take place in the Hyatt Regency, Istanbul. The conference will be attended by Prime Minister Recep Tayyip Erdoğan.