Inflation remains the country's main concern. Still out of control, it soared to nearly 70% in April year-on-year (69.9%) unheard of since 2002; this is the ninth month of consecutive increases. Soaring energy prices largely linked to the war in Ukraine (61.14% year-on-year), and the weakness of the Turkish lira are eroding the purchasing power of Turks. Prices rose in almost all product categories, but it was transport (+106% over one year) and foodstuffs excluding alcohol (+89%) which increased the most. Faced with this situation, the Turkish central bank has revised its inflation forecast upwards to 42.8% for 2022.
On the other hand, this situation has a positive impact on both exports and foreign investment. The low value of the Turkish lira promotes international trade, as foreign countries see it as an opportunity to buy at a lower cost. Exports jumped 24.6% in April 2022 compared to the previous year to reach $23.4 billion, marking a new record. As for foreign direct investments (FDI), they reached $2 billion in Q1 2022; 50% are from EU countries (including the UK) and 32% from other European countries. Companies of Swiss origin were the first investors during this period (31% of the amount of FDI received), followed Dutch and German companies.
Turkey thus retains its industrial attractiveness as evidenced by decisions of foreign companies to invest in Turkey during the month of May. The diversity of the sectors targeted and the modes of establishment chosen show the resilience and dynamism of the country's industrial ecosystem, despite a context of war.
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