Country risk

Country risk in Turkey is moderate to high. The OECD country grade is 5. The major ratings agencies have sub-investment grade sovereign credit ratings for Turkey. Turkey’s credit ratings from the OECD and private rating agencies have been lowered in recent years, reflecting the country’s substantial reliance on volatile external financing and ongoing political and policy uncertainty that have raised the risk of a balance of payments crisis and government default.

Turkey is ranked 33rd out of a possible 190 countries on the World Bank’s ease of doing business scorecard. Turkey’s rank has improved significantly following reforms in numerous areas, including trading across borders, paying taxes, and getting credit. But resolving insolvency remains somewhat more difficult than other emerging European countries. Corporate and financial information is sometimes not available or sufficiently reliable, which can deter private investors.

The risk of expropriation in Turkey is high. Since July 2016, the Turkish government has expropriated more than 1,100 companies worth more than US$11 billion, according to the 2020 US investment climate statements. This is mainly because of companies’ alleged links to terrorist organisations.

Turkey’s scores on several measures in the World Bank’s governance indicators are broadly in line with emerging European countries. But Turkey scores particularly lowly on measures of voice and accountability and political stability and absence of violence. Its low ranking probably reflects power struggles and constitutional crises that have occurred over the past 20 years.