Foreign Trade News from Turkey

Turkish economy expected to rebound next year

The European Bank for Reconstruction and Development (EBRD) expects gradual recovery in the Turkish economy in 2020 after the start of a recession at the end of last year which is expected to result in economic contraction in 2019.

In its latest economic outlook, released yesterday, the EBRD said the Turkish Lira’s depreciation and high interest rates will continue to dampen consumption and investment, although exports could make a positive contribution to growth.

According to the development bank report, private sector debt reduction - or deleveraging - means that the economic recovery will be slower than in past crises, when credit growth stimulated recovery.

After growing by 2.6 percent in 2018, a contraction of around 1.0 percent is expected in 2019, while 2020 will likely see a gradual recovery of growth to around 2.5 percent, it said.

The EBRD report added that leading indicators suggest that the slowdown may have bottomed out in the first quarter of 2019, but adds this may in part be a result of temporary counter-cyclical measures introduced before municipal elections in March 2019.

“Despite a stabilization of the lira in the wake of high volatility in 2018, the currency remains highly vulnerable to fragile investor sentiment,”

“Inflation in Turkey is expected to remain high for the first half of 2019 after hitting a 15-year peak of 25 percent in October 2018. Inflation is likely to start to decline gradually in the second half of 2019 as the impact of last year’s lira depreciation recedes,” it argued.

The Turkish Central Bank on April 30 kept the country’s year-end inflation forecasts at 14.6 percent this year, 8.2 percent next year, and 5.4 percent in 2021.

As laid out in the new economic program announced last September, the Turkish government’s inflation rate target is 15.9 percent this year, 9.8 percent in 2020, and 6 percent in 2021.

Rebalancing underway

Meanwhile, the European Commission said on May 7 in its spring forecast report that Turkey’s economy is rebalancing.

“The correction of external imbalances and of past high credit growth leads to a contraction of domestic demand with a return to growth expected for the second half of 2019,” it noted.

According to the commission, a strong contribution of net trade, reflecting mostly a high income elasticity of import demand, dampens the shock to the domestic economy.

The report argued that financial conditions are expected to remain volatile in the first half of the year with interest rates and stock markets entering a more tranquil phase later in the year.

The commission predicts that the Turkish economy will contract 2.3 percent this year but it will rebound to achieve growth rate of 3.9 percent in 2020.

In its economic program, the government forecast a 2.3 percent GDP growth for this year and 3.5 expansion in the economy next year.

Turkey, Economy, EBRD, Turkish Lira, Interest Rates, Growth 

Kaynak:Hürriyet Daily News

Global investors see Turkish economic reforms as positive, and especially the reform package aimed at improving Turkey's investment climate shines out as first class.

Global investors see Turkish economic reforms as positive, and especially the reform package aimed at improving Turkey's investment climate shines out as first class, Deputy Prime Minister Mehmet Simsek told Anadolu Agency late Friday.

Simsek met with more than 100 global investors as part of the current Spring Meetings of the Boards of Governors of the International Monetary Fund and the World Bank Group in Washington between April 16 and 22.

"We had the chance to discuss Turkey’s economy and reform agenda after presidential and parliamentary elections” set for June 24, Simsek said.

A reform package of over 100 articles -- -- designed by the Coordination Council for the Improvement of the Investment Environment (YOIKK) -- to encourage investment in Turkey was sent to parliament on Jan. 30.

Some 35 articles were approved and published in the Official Gazette on March 10.

The reforms aim to simplify the process of setting up companies, getting construction permits, foreign trade, doing research, and bringing in investments.

Simsek also met with U.S. Treasury Secretary Steven Mnuchin and discussed President Donald Trump's decision to imposing a 25 percent tariff on imported steel and a 10 percent tariff on aluminum.

He gave Mnuchin information on how Turkey has a foreign trade gap in iron and steel production.

Ankara is in touch with the U.S. over its decision to impose tariffs on steel and aluminum imports, Economy Minister Nihat Zeybekci said on April 5.

"We have a $1.2 billion export in the iron and steel sector and $1.3 billion in imports [from the U.S.]. There’s a gap here,” Zeybekci said. 

By Gulbin Yildirim

Anadolu Agency 

 

Turkey may need to take reciprocal measures against Russia’s restrictions on imports of tomatoes and other produces, Economy Minister Nihat Zeybekci said on Aug. 9.

Turkey may need to take reciprocal measures against Russia’s restrictions on imports of tomatoes and other produces, Economy Minister Nihat Zeybekci said on Aug. 9. Speaking to businessmen in Ankara, Zeybekci said there were still lingering issues on the export of Turkish tomatoes to Russia, and that restrictions were in place for other vegetables as well. “This may create a need for us to take reciprocal measures,” he said, as quoted by Reuters.  Russia banned Turkish tomato imports after Turkey shot down a Russian jet near the Syrian border in 2015.  Ties between Ankara and Moscow have largely normalized since although the ban remains in place.  On June 2, Russian Prime Minister Dmitry Medvedev signed a decree lifting the ban on some agricultural produce and Turkish companies involved in construction, engineering and tourism in the aftermath of the downing of a Russian fighter jet in 2015.  Following the lifting of the sanctions, only two restrictions are left for Ankara, the issue of visa-free travel for Turkish citizens and tomatoes. Consultations on the seasonal admission of Turkish tomatoes to the Russian market will continue during the summer, said Dvorkovich.

Daily news 

Turkey’s industrial production advanced 3.4 percent in June 2017 compared to the same month last year, the Turkish Statistical Institute (TÜİK) announced on Aug. 8.

Turkey’s industrial production advanced 3.4 percent in June 2017 compared to the same month last year, the Turkish Statistical Institute (TÜİK) announced on Aug. 8. Turkey’s industrial output is deemed a vital indicator for the economy as it is seen as a preliminary gauge for GDP growth.  On an annual basis, the manufacturing index saw the biggest rise in June, up 3.8 percent, among all three main sub-indices, TÜİK said.  In the same period, the electricity, gas, steam, and air-conditioning supply index also increased by 2.5 percent while the mining and quarrying index decreased by 0.5 percent. Meanwhile, the country’s industrial production declined by 0.4 percent in June on a monthly basis, TÜİK noted. In June, the mining and quarrying index rose by 1.2 percent while the electricity, gas, steam, air-conditioning supply, and manufacturing indices fell by 0.6 percent and 0.5 percent, respectively.

ANKARA - Anadolu Agency