by Bobby Casey, Managing Director
I am writing this sitting in the Istanbul airport waiting on my connection back to Latvia. I wanted to share with you my reflections over the past few days as Turkey could be an excellent option for many of you looking to move overseas and internationalize your life.
One thing I found very interesting is that Turkey is the only country in the world that is pushing for a gold-backed currency. The country has a thriving economy that has been growing at a rapid pace for the past several years and now is making serious efforts to strengthen its monetary system.
The Turkish government has more than doubled the amount of gold lenders are able to hold in reserves as part of their reserve requirement changes. This means a dramatic shift in the safety of their currency with lenders now able to hold up to 30% in gold as reserve in addition to paper currency and other instruments.
This shift means that Turkish banks can now use their shiny metal as fungible money reserves against foreign currency deposits. In addition, Turkish banks have now expanded their offering of gold-backed loans giving clients the ability to place their personally held gold into bank accounts and use it as collateral for loans.
Turkey is taking dramatic action towards re-monetizing gold again which is strengthening their banking sector. This step should not be taken lightly as it is very possible that other nations around the world follow in Turkey’s footsteps shifting away from a strictly fiat based currency.
Turkey is also one of the fastest growing economies in the world. Like the rest of the world, they showed a decline during the most recent crisis, although it was significantly less severe than in many countries. Only in 2009 did Turkey see a decline in real GDP of -4.7%.
Take a look at the graph below:
You will notice that growth over the past 2 years has been over 8%. This is a sign of a very healthy economy. If you are looking for opportunity, just follow the money flow.
The most recent data for Turkish unemployment stands at 8.8% as of August 2012. While that may seem high, it is worth noting that the Turkish Chamber of Commerce estimates that approximately 30% of all economic activity in the country is conducted in the black market.
After being in Istanbul for a few days, I can attest that this must be true, or even a low estimate. Grass-roots entrepreneurship is everywhere. There are thousands of street vendors selling everything from sweets, to kebabs, to scarfs, to jewelry. So while the measured unemployment numbers may suggest a stagnating economy, the reality is that people are working and making money. The real economy there is booming.
While here I found the city to be very beautiful. The city sits at the intersection of Europe and Asia surrounded by several bodies of water: X, Y, Z. Napoleon once said, “If the world had a capital, it would be Istanbul.”
The architecture is fantastic with beautiful, old historic buildings, cobblestone streets, excellent public transportation and more shopping than you could ever possibly hope for.
Here are a few images I took using my phone over the past couple of days (sorry for the poor quality, I’m not a photographer):
The cost of living also seems very good. A nice 3 bedroom apartment in the center of the city will cost you around $950/month and a nice dinner for 2 will run you around $32. (www.numbeo.com). The only thing we found to be expensive in the city was alcohol. It seems they have a 300% tax on alcohol making cocktail prices at nightclubs on par with the priciest clubs of Miami or London.
Of course we did find a few ‘underground’ clubs that were very interesting and with very reasonable prices. For the party-goer, this could be an amazing city to live as there is always excitement going on. There are an estimated 950 bars in the Taksim square area alone.
Banking in Turkey is excellent with many great banks. They are very well capitalized and with a huge amount of investment coming into Turkey, they are flush with cash and willing to do business. The only downside is that according to Turkish law, one must be physically present to open a bank account. Of course, this isn’t really a negative as once you come here you may not want to leave.
One thing that really struck me was the friendliness of the people. Everywhere we went people were smiling and friendly and easy to engage in conversation. Yesterday while shopping in one store, my 5 year old must have had his checks pinched or even kissed by at least 10 girls in a matter of one hour.
After asking directions from a local on the street, one man volunteered to look up the address and directions on his iPhone and even lead us there. A shoeshine vendor saw us looking at a map and approached us out of the blue just to ask if we needed help finding something.
Istanbul is truly a melting pot of cultures with a very diverse range of ethnicity that live in harmony. Even the shop owners place their wares on the street with no concern for theft. Last night I asked one shop owner why he was so comfortable leaving his goods on the street with him inside the shop. I asked if theft was an issue. He just smiled and said that is never a problem in Istanbul. Judging by the number of shops doing the same thing, I tend to believe him.
It is one of those cities where you feel comfortable walking alone at night. People are friendly and respectful. The economy is good and people seem to have jobs and money so crime is not a serious concern.
If you are looking for a growing economy, safe environment, cultural diversity, and a vibrant city, Istanbul may just be the perfect place for you. At a minimum it is worth a visit.