Turkey News August 2020
(as at August 16, 2020)
Istanbul ranks 16th among start-up ecosystems
Startup Genome, a global entrepreneurship research institution, has published its latest report assessing over 270 start-up ecosystems across over 100 countries. Istanbul ranks 16th among the world’s best emerging ecosystems, ahead of cities like Dubai, Moscow, Hamburg, and Brussels. Istanbul scored highest in the “Funding” and “Talent” categories with 9 out of 10, followed by “Market Reach” with 8, and “Performance” with 7. Having spawned its first unicorn, Peak Games, this year, it is expected that Istanbul’s rank will be higher in 2021.
July 3, 2020
EDAG opens office in Turkey
The German-Swiss engineering corporation EDAG has established an office in Gebze IT Valley, a technology development zone in Kocaeli province. Its first project will be for TOGG, the joint venture for building the eponymous “national automobile” of Turkey. According to Cosimo De Carlo, EDAG’s CEO, TOGG will significantly contribute to e-mobility in Turkey and Europe.
July 13, 2020
Ground broken for “national automobile” plant
The ground-breaking ceremony for the plant to produce TOGG, the “national automobile” of Turkey in Gemlik, Bursa province, has been held with the participation of Turkish President Recep Tayyip Erdoğan. The plant is planned to go into operation as early as 2022. Gürcan Karakaş, TOGG’s CEO, stated that the design of the battery of the electrically powered vehicle, which would provide ranges of 300 and 500 km, respectively, will be completed soon.
July 20, 2020
Insider receives multi-million dollar investment
Turkish company Insider, which develops software for marketing departments, has secured a USD 32 mn investment from the investors Riverwood Capital, Sequoia, Wamda, and Endeavour Catalyst. Insider operates in 23 countries and has more than 500 employees. 80% of its revenue stems from operations outside Turkey.
July 24, 2020
New social media regulation in force
The Turkish parliament has passed a new regulation to govern the social media. Accordingly, any social network provider that has more than 1 million daily accesses is now obliged to name at least one representative in Turkey, and shall be subject to pay a compensation if any unlawful content is not removed within 24 hours.
July 29, 2020
VAT cut for certain sectors
The Turkish Ministry of Treasury and Finance has announced that the VAT rate for certain sectors has been decreased to counter the negative impact of the coronavirus pandemic. The VAT rate has been reduced from 18% to 8% for various sectors including passenger transportation, event organization, hairdressing, tailoring, dry cleaning and various repair and maintenance services, and from 8% to 1% for accommodation, restaurants, and cultural events. Furthermore, the withholding tax on rented workplaces has been reduced from 20% to 10% until the year-end.
Aug. 1, 2020
Duties on the import of some product groups changed
According to the recent changes in the import regime, the custom duties on garlic, dried vegetables, nuts and bananas have been decreased and replaced by a public housing fund surcharge. Besides, new customs duties of 4.3% to 20% have been introduced for various other food products, including beer, tea, yeast, chocolate, chewing gum, pasta, bread and cake. The duty will be 0% for the EU countries.
Aug. 6, 2020
U.S. threatens sanctions over Turkish Stream and Nord Stream 2
U.S. Secretary of State Mike Pompeo has announced that companies involved in the Turkish Stream and Nord Stream 2 pipeline projects, which aim to convey Russian natural gas to Europe, will be subject to sanctions. Accordingly, European companies Shell, Uniper, OMV, Wintershall and Engie may be the target of possible sanctions. While Nord Stream 2 is still under construction, Turkish Stream had been inaugurated in January 2020.
July 16, 2020
Germany lifts travel warning for four Turkish provinces
Germany has lifted its travel warning for the Aydın, Antalya, Izmir and Muğla provinces, which are the main tourism destinations on the Aegean and Mediterranean coasts of Turkey. Nevertheless, travellers are still obliged to take a PCR test 48 hours before their flight back to Germany. People with a positive test result have to stay in quarantine in Turkey or receive treatment.
Aug. 4, 2020
Tension in the Eastern Mediterranean
The Turkish ship “Oruç Reis”, accompanied by the Turkish naval forces, has begun seismic exploration in the Eastern Mediterranean, drawing sharp reaction of Cyprus and Greece. France and Greece launched a joint military exercise in the region. The U.S. Ministry of Defence (Pentagon) called for decreasing the tension and finding a solution to the disagreements.
Aug. 14, 2020
Turkish Central Bank keeps interest rate stable
The Central Bank of the Republic of Turkey has kept its policy rate (one-week repo auction rate) at 8.25%. According to the bank, the economic recovery is gaining pace, recent measures contribute to financial stability, and the easing of travel restrictions is expected to improve tourism revenues. The recovery in exports of goods and low levels of commodity prices will support the current account balance in the forthcoming period. The pandemic-related rise in unit costs has led to some increase in the trends of core inflation indicators, and food inflation has risen due to seasonal and pandemic-related effects. Demand-driven disinflationary effects will be more prevalent in the second half of the year.
July 23, 2020
Export increase of 15.7% in June
In June 2020, the exports of the Turkish economy increased by 15.7%, and imports by 8.3% over the same month of the previous year (YOY). With exports increasing to USD 13.5 bn, and imports to USD 16.3 bn, the trade deficit decreased by 17.0% down to USD 2.9 bn. In June, the main partner for exports continued to be Germany (USD 1.3 bn), ahead of the UK (USD 1.0 bn), and the USA (USD 790 mn). China was the country where the most imports to Turkey came from (USD 1.9 bn), followed by Germany (USD 1.5 bn), and Russia (USD 1.2 bn).
July 29, 2020
In July 2020, consumer prices in Turkey increased by 0.58% in comparison to the previous month. The CPI went up by 11.76% YOY. The highest monthly rise was registered in transportation (2.44%), ahead of the item miscellaneous goods & services (2.39%). The expenditure groups that reported a drop were clothing and footwear with -3.48%, and food & non-alcoholic beverages with -1.28%. The biggest annual increases were in miscellaneous goods & services (21.90%), and alcoholic beverages & tobacco (21.78%). The domestic producer price index (D-PPI) increased by 1.02% monthly, and by 8.33% YOY.
Aug. 4, 2020
Turkish lira depreciates sharply
Due to the state’s decreasing foreign exchange reserves, cash outflow by foreign investors, and increasing domestic demand for foreign exchange, the depreciation of the Turkish lira has accelerated, with USD/TRY surpassing 7.27- and EUR/TRY 8.60- as of August 7. It is expected that the Central Bank of the Republic of Turkey will be compelled to increase the interest rates in the next months.
Aug. 7, 2020
Unemployment announced as 12.9% in May
In May 2020, around 3,826,000 people in Turkey aged 15 and older were officially out of work. The unemployment rate was 12.9% with a 0.1-point increase YOY. The youth unemployment rate in the 15-24 age bracket increased to 24.9%. The labour force participation rate went down to 47.6% in total, and to 29.7% for females. Of those with employment in this period, 55.6% were employed in the service sector, 20.4% in industry, 18.8% in agriculture, and 5.2% in construction.
Aug. 10, 2020
Industrial production continues to improve
Turkey’s industrial production index in June increased by 0.1% YOY. The highest increases in the manufacturing industry category were in the product groups “other manufacturing” (31.0%), “computer, electronic and optical products” (21.5%), and “other non-metallic mineral products” (13.7%). The highest decreases, on the other hand, were observed in “motor vehicles, trailers and semi-trailers” (-20.4%), “furniture” (-16.3%), and “leather and related products” (-16.0%).
Aug. 14, 2020
Overview of Monthly Data