Turkey: a MINT or one of the ‘fragile five’?

The new emerging market acronym on peoples’ lips these days is Jim O'Neil's MINTs – Mexico, Indonesia, Nigeria and Turkey – following in the footsteps of the BRICs on the path to becoming the economic super-powers of the future.

O'Neil visited each one of the MINTs for a recent BBC radio series and, while acknowledging the unique challenges each country faced, he was upbeat about their prospects.

In Turkey he highlighted the rapid expansion of Turkish airlines (and Istanbul airport with it) to support Turkey's burgeoning trade, which is increasingly less reliant on crisis stricken Europe.

He visited white goods manufacturer BEKO, which has invested in R&D so that it can take on more established brands on quality as well as price (and take market share, even in the home of German rivals such as Bosch and Miele).

However, violent unrest in June 2013 over the Gezi Park development near Istanbul’s Taksim Square and, more recently, the much publicised feud between Prime Minister Erdogan and followers of the Gulen movement have given some people reason to pause for thought.

O'Neil quizzed Richard Branson on his view of Turkey as an investment destination. Branson was characteristically bullish, saying Turkey offered great growth opportunities for his Virgin Megastore and Virgin Mobile brands. Many other foreign (particularly non-western) investors remain equally unperturbed.

Yet there are concerns for foreign investors. The country's yawning current account deficit and the volatility of its currency is one area of concern. The vitriolic dispute between Erdogan and his former Gulenist allies is another.

Highlighting these challenges (and not to be outdone in the stakes for emerging market catchphrases), US-based economist Nouriel Roubini tweeted his 'fragile five' from the World Economic Forum in Davos - Brazil, India, Indonesia, South Africa and Turkey.

Turkey has come a long way since the 2001 IMF bail-out under Erdogan and the AKP’s stewardship, and clearly it continues to offer great opportunity. But equally clear are the challenges and the need for investors to go in with their eyes open

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Jamie Hepburn | Political Risk Specialist
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