Turkey's Economic Revival: A Tale of Investor Delight and Public Discontent
Foreign Investments Surge Amid Policy Shifts, But Ordinary Turks Feel the Strain
Turkey’s efforts to attract foreign investors are paying off. A year since shifting away from unconventional policies, investors are starting to believe in the narrative of economic rationality under Finance Minister Mehmet Simsek.
Foreign Investors Return
The money has flowed since Erdogan shifted economic policy.
Officials claim “the worst is over” for inflation, with a restrictive monetary policy and a benchmark rate of 50%. The government is preparing for more fiscal tightening.
However, this turnaround has a flipside. Consumers face price increases outpacing incomes, and higher borrowing costs. Elif Bulut, a 54-year-old secretary in Ankara, says people are forced to “swallow the bitter pill.”
Minimum Wage Hike to Mitigate Inflation
The minimum wage rose 49% to 17,000 liras ($525) in January.
Growing discontent over falling disposable incomes might prompt Erdogan to reconsider his policies. Investors fear premature rate cuts if Erdogan reviews high borrowing costs.
An interim hike in the minimum wage next month could signal to investors a commitment to curb inflation, which was over 75% last month. For ordinary Turks, a raise would ease their burden temporarily.
Chart of the Week
Saudi Arabia has dethroned China as the top issuer of international debt among emerging markets.
Top EM Bond Sellers
Saudi Arabia leads in bond sales in emerging markets this year.
Bond sales from Saudi Arabian entities have increased 8% so far this year, exceeding $33 billion. The government accounts for more than half of this.
Business News Roundup
Adnoc’s pursuit: The Abu Dhabi oil giant is prepared to boost its takeover bid for Covestro to about $12.5 billion.
Private equity deal: Brookfield Asset Management is investing in GEMS Education, a Dubai-based family business.
Masdar’s acquisition: The UAE renewable energy producer agreed to buy Greece’s Terna Energy in a $2.6 billion deal.
ADIA’s new hire: Abu Dhabi’s wealth fund enlisted a finance chief to oversee private equity investments in China.
Extreme heat: Saudi Arabia reported over 1,300 pilgrim deaths during Hajj, with temperatures at a two-decade high.
Six candidates: Iranians will elect a new president on June 28. Most candidates are anti-US hardliners, but a lone reformist leads a new poll.
Reformist Candidate for Iran’s Presidential Election
Masoud Pezeshkian, Photographer: Pacific Press/LightRocket
Wealth Haven
The UAE remains a top destination for high-net-worth individuals, with a projected net inflow of over 6,700
millionaires in 2024. Dubai was ranked the 15th most expensive city globally for expatriates.
Where the World’s Wealthy Are Moving
Net number of millionaires expected to arrive or leave in 2024
Final Word
Dubai’s real estate market defies predictions of a slowdown. Home values have risen for 15 consecutive quarters, while rents have climbed for 13 straight quarters. Single-family homes now rent for an average of $96,000 a year.
Many analysts had anticipated a market moderation by early 2024, but those predictions haven’t materialized. Rising rents and falling interest rates will likely encourage new buyers despite affordability concerns.
Dubai Real Estate’s Resilience
The property market’s resilience could signal Dubai breaking free from its boom-and-bust cycles.
