Türkiye’s investment potential reaches $30B annually with sustained reforms

Türkiye possesses the economic fundamentals to attract as much as $30 billion in foreign direct investment annually, though achieving this ambitious target by 2026 requires consistent policy stability and structural reforms. Tolga Demirozu, Chairman of the International Investors’ Association (YASED), outlined this potential, noting that current FDI inflows of $11.6 billion, while showing a 35% annual increase, still fall short of the country's projected global share.

Policy Shifts and Cautious Investor Optimism

Demirozu credited improved monetary policy, fiscal discipline, and strategic communication since March 2024 for enhancing Türkiye's risk profile and investor sentiment. "Progress in green transformation and digitalization positively impacted investor expectations," he stated, while emphasizing that "cautious optimism" prevails. The continuity of the disinflation process and structural reforms are identified as critical to converting this optimism into sustained capital inflows.

The Green and Digital Imperative for Competitiveness

Key developments such as the 5G tender, the forthcoming climate law, and an emissions trading system framework are seen as vital to attracting next-generation investments. Demirozu highlighted that global FDI is increasingly directed toward green technologies, making Türkiye's focus on permitting for energy projects and innovation in areas like hydrogen crucial. He also pointed to the role of high-level councils like YOIKK and YDK in strengthening policy dialogue on AI, green energy, and logistics.

EU Dominance and Geopolitical Reshaping of Supply Chains

The European Union remains the dominant source of investment in Türkiye, accounting for 65% of FDI in the first ten months of 2025. However, Demirozu noted that global supply chain shifts due to "friend-shoring" present both opportunities and challenges. While modernizing the Customs Union with the EU could boost competitiveness, policies like the "Buy European" initiative and potential exclusion from green vehicle regulations pose significant risks that require careful navigation.