Turkey’s Downturn Forces Top Companies to Seek Growth Elsewhere

(Bloomberg) -- Turkish industrialists are shifting their focus abroad to drive expansion next year, a sign of companies' continued pessimism over domestic demand a year after the economy exited recession.

Major firms' tepid outlook for next year contrasts sharply with the official view held by President Recep Tayyip Erdogan's government, which set a 5% growth target for the 2020-2022 period.

In an attempt to enable a rapid economic recovery from this year's lack of expansion, authorities are again relying on a boom in cheaper credit instead of deeper reforms investors have been demanding. Even so, most economists expect the pace of growth to be less than half of next year's target.

Below are highlights from a panel on Wednesday in Istanbul, where executives from major conglomerates, including the likes of Godiva chocolate owner Yildiz Holding AS and Hyundai Motor Co. partner Kibar Holding, spoke of risks to the $722 billion economy.

Ebru Ozdemir, Limak

Uncertainties surrounding the lira and geopolitical tensions emanating from Syria, where Turkey's military is trying to create a buffer zone, make for the biggest risks facing the economy, according to Ebru Ozdemir, chairwoman of Limak Yatirim Holding, one of the builders of Istanbul's $11 billion new airport.

“We are looking at projects abroad in the sectors we find it difficult to work in Turkey,” said Ozdemir, whose company is also an investor in Turkish infrastructure projects worth billions of dollars. Expanding business in the cement sector in Africa is one such option, she said.

Haluk Kayabasi, Kibar

Kibar Holding, which co-produces Hyundai cars in Turkey with its South Korean partner, is seeking investments abroad to “diversify” risks, Chief Executive Officer Haluk Kayabasi said.

Among plans for next year is an investment worth as much as $300 million to build an aluminum plant in the U.S. as well as acquisitions in Europe next year, he said.

Ahmet Dorduncu, Akkok

The government's growth target for next year is too ambitious given the fact that the official baseline for this year is 0%, Ahmet Dorduncu, CEO of Akkok Holding, said.

“I have serious hesitations about how GDP growth will jump to 5% in 2020,” he said.

Mehmet Tutuncu, Yildiz

Yildiz Holding's chief Mehmet Tutuncu held a more cautious line than most executives, citing plans for “organic” growth for the maker of Godiva chocolate, which gets a bulk of its revenues from operations outside Turkey.

Yildiz will use some of the proceeds from its $1.3 billion sale of its Godiva units in Asia and Australia to boost existing operations after repaying some debt, Tutuncu said.

To contact the reporter on this story: Ercan Ersoy in Istanbul at eersoy@bloomberg.net

To contact the editors responsible for this story: Onur Ant at oant@bloomberg.net, ;Stefania Bianchi at sbianchi10@bloomberg.net, Vernon Wessels

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