Key policy rate decrease in Turkey and how it to affect country’s investment attractiveness

It was announced the Central Bank decreased the interest rate by 0.75% on January 16, 2020. The rate decrease is a protective measure aimed at slowing down inflation and stimulating the country’s economy. This measure has been taken before and it is alleged that the government is going to continue this trend. However, experts express their concerns on this situation.

According to the experts, low interest rates may have negative impact on the investment attractiveness of the country. In 2019, foreigners invested $5.9 billion in the Turkish economy. Most of money was invested in the real estate market. Experts believe that the decreased interest rates may signal about the instability of the Turkish economy and geopolitical risks. This may result in the situation when foreign investors consider Turkey as a high-risk investment country.

Nevertheless, the current economic policy shows good results. The inflation rates are going down. However, there are still problems like the large government debt, weakening of the national currency and economic stagnation. On the one hand such problems create good conditions for foreign property buyers. On the other hand, if they are going to move to Turkey, their priority is the economic stability.