Long one of the biggest foreign investors in Türkiye, the European Bank for Reconstruction and Development (EBRD) on Wednesday said its total investments in the country have exceeded 20 billion euros ($21.70 billion).
“This reflects the strength of our partnership with local stakeholders and our long-term commitment and confidence in the potential of the Turkish economy, even during challenging times,” Arvid Tuerkner, the EBRD’s managing director for Türkiye, said.
The remarks came as Tuerkner reflected on seven years in the country as he prepares to transition to his new role as the EBRD director for Ukraine as of next month.
The European lender has invested more than 20.23 billion euros in Türkiye since 2009 across 450 projects and trade finance facilities, with 93% of funds channeled to the private sector.
The EBRD invested a record 2.5 billion euros last year, spearheaded by green investments and the need to respond to the devastating earthquakes that struck Türkiye’s southeastern region in February 2023.
So far, in 2024, the bank has invested almost 1 billion euros, according to its website.
Dynamic private sector
Tuerkner highlighted the vitality of Türkiye’s private sector, noting its strong appetite for growth, innovation and development. He acknowledged that this dynamism is evident in the entrepreneurial spirit and continuous drive for progress across various industries.
However, he also said the economic environment included important challenges and emphasized the importance of predictability in the investment environment and regulatory frameworks.
“One of the key lessons from my time in Türkiye is the extraordinary capacity of the Turkish private sector to adapt to challenges. The agility and resilience displayed by local businesses are commendable. Yet, these qualities alone may not suffice in the case of continuous and severe economic fluctuations. This is where the role of international investors like us becomes crucial,” Tuerkner remarked.
He said the bank’s presence and financial support are “vital” in promoting stability and progress in the Turkish economy.
“By providing much-needed capital and expertise, we help bridge gaps and create a more conducive environment for sustainable growth. Therefore, consistently supporting structural reforms that enhance the autonomy of local institutions, the effectiveness of regulatory frameworks and the investment climate is essential.”
Policy shift
During his tenure, Tuerkner witnessed the Turkish private sector’s response to various crises, from economic challenges to natural disasters. He noted that global and local challenges have heightened economic vulnerabilities, making structural reforms even more critical.
“However, over the past year, we have seen many positive steps toward a return to orthodox economic policies and signs of strong improvement in investor confidence regarding Türkiye’s potential. This sentiment has also been acknowledged by rating agencies,” he noted.
Authorities reversed years of loose policy after last year’s presidential and parliamentary elections and delivered aggressive monetary tightening, mainly to curb stubbornly elevated inflation.
The annual inflation rate began what is expected to be a sustained fall in June, dipping to 71.6%.
Since June last year, the country’s central bank has raised its benchmark policy rate by a total of 4,150 basis points in the tightening drive that has significantly improved investor sentiment and led to strong demand for Turkish assets.
The bank last raised interest rates in March, by 500 basis points, and has since held steady while vowing to tighten policy more if it predicts the inflation outlook will worsen, a hawkish pledge it repeated on Tuesday.
“Maintaining a return to orthodox policies is crucial for us and for economic stability. As of now, we see no indication of deviation from this path,” Tuerkner said.
Positive signs amid inflationary pressures
Despite ongoing pressures, Tuerkner expressed optimism about signs indicating the start of a disinflationary trend.
“High inflation complicates pricing strategies even for the most agile private sector firms, fueling uncertainty and caution. In such uncertain times, resilience becomes even more crucial for economies. We are working with our partners and clients in Türkiye to invest in projects that can enhance the resilience of the Turkish economy,” he explained.
“A robust way to achieve this is by building an inclusive and green economy that can absorb both global and local shocks.”
During his term, Tuerkner says he noted a significant increase in interest in green investments and a willingness among companies to accelerate their transformations.
That led the EBRD to provide financing for projects across various sectors, including energy, infrastructure, and agriculture. “None of this would have been possible without the strong interest shown by companies,” Tuerkner added.
‘Unique’ challenges in Ukraine
Reflecting on 2023, Tuerkner highlighted what he said was an “unprecedented” response of private sector companies after the devastating February tremors.
“The support provided to the people and cities affected by the earthquakes was one of the strongest demonstrations of solidarity I have ever witnessed. I am proud of the EBRD’s contributions in this regard,” he said.
As he prepares for his new role in Ukraine, Tuerkner also spoke about what he sees as “unique” challenges posed by the war there and its impact on the country’s economic stability.
He emphasized the crucial role and influence of the private sector in maintaining economic stability during difficult times, drawing parallels with his experiences in Türkiye.
“For a competitive, resilient and inclusive economy, the private sector must be supported, especially in developing capacities in digital advancements, environmental measures and corporate efficiency. However, these capacities need to be backed by a favorable regulatory environment, making policy dialogues extremely important,” said Tuerkner.
“When these efforts come together, they reaffirm the potential of impact institutions like the EBRD to fulfill their missions. I am confident that, just as my team in Türkiye has achieved these important strategic goals, my colleagues in Ukraine will do the same.”
