Turkey News January 2021

Covid-19 Status

(as at January 17, 2021)

Business

Gelita acquires majority of Turkish gelatin producer
German Gelita AG, the globally leading supplier of gelatin and collagen, has acquired 65% of Turkish gelatin and collagen producer Seljel, owned by Tezman Holding. Thanks to this acquisition, Gelita shall be able to procure halal cattle gelatin from Turkey. Established in 1961, Seljel is Turkey’s oldest gelatin producer.
Dec. 4, 2020

Arçelik buys stake in Hitachi division
Turkish home appliances manufacturer Arçelik, controlled by Koç Holding, is to acquire 60% of Japanese Hitachi’s home appliances division for USD 300 mn. Accordingly, the 2 production and 10 sales companies of Hitachi Global Life Solutions outside of Japan with 3,800 employees in total shall be transferred to a new partnership to be established in the second quarter of 2021.
Dec. 17, 2020

Hyundai acquires Kibar Holding’s share in their partnership
South Korean industrial giant Hyundai Motor Company has decided to acquire the 30% share of Turkish Kibar Holding in their joint venture Hyundai Assan. With 245,000 passenger cars per year, Hyundai Assan has the 5th largest production capacity in the Turkish automotive industry.
Dec. 18, 2020

Siniora Food becomes majority shareholder of Polonez
Jordanian company Siniora Food has acquired 77% shares of Turkish Trakya Et for USD 19 mn. Trakya Et operates in the charcuterie, industrial food solutions and restaurant business with its Polonez brand. The production facility of the company, located in Çatalca (Istanbul province), has an annual capacity of 8,000 tons and more than 500 employees.
Dec. 22, 2020

Turkish Environmental Agency established
The Turkish parliament has passed a law regarding the establishment of the Environmental Agency attached to the Ministry of Environment and Urban Planning. The new institution shall work on the implementation of the Zero Waste Project, waste recycling, and packaging collection. Besides, it has now become mandatory to do engine oil changes and deliver waste engine oils only in locations designated by the Ministry.
Dec. 25, 2020

PCR test obligation takes effect
As of Dec. 30, 2020, all passengers entering Turkey by air, sea, rail, and road are obliged to submit the negative result of a PCR test taken within the last 72 hours. Passengers without proof of negative testing must either return or stay in quarantine in Turkey for seven days. The procedure will remain in force until at least March 1.
Dec. 30, 2020

Oppo starts production in Turkey
Chinese mobile phone manufacturer Oppo plans to begin manufacturing in Tuzla, Istanbul in February. Following an investment of USD 50 mn, the new plant is expected to create 1,000 jobs. Oppo had entered the Turkish market at the end of 2018 and reached a market share of 8% in its first year.
Dec. 31, 2020

Coronavirus measures extended
The Turkish government has extended the duration of some measures to counteract the economic impact of the coronavirus pandemic. The withholding tax reduction for commercial property rentals, from 20% to 10%, the VAT reduction for office rentals, from 18% to 8%, and the VAT reductions in several sectors, including accommodation, refreshments, and passenger transportation, have been extended until May 31, 2021. Also, the regulation allowing companies forced to discontinue their activities due to the coronavirus pandemic to benefit from short-time compensation for their employees has been extended until February 28. Furthermore, the ban on dismissals shall also remain in force for two more months after January 17.
Dec. 15 – 31, 2020

Additional customs duties become permanent
The additional customs duties charged on 4,815 product groups, effected by seven decrees in 2020 to protect domestic production against imports during the pandemic and to be valid until Dec. 31, have been combined under a new decree. Accordingly, these custom duties, which vary between 1.9% to 30%, have become permanent until revised by a new decree. Imports from the EU and EFTA countries shall be exempt from the duties.
Jan. 4, 2021

International M&As up 70% in 2020
Deloitte has reported that the volume of M&As in Turkey has increased by as much as 70% over 2019 to USD 9.0 bn in 2020. There were 304 mergers and acquisitions, with the transaction volume of foreign investors increasing to USD 4.6 bn, 35% more than in the previous year. With 47 deals, Europeans were the main actors among foreign investors in terms of the number of transactions, whereas North America led the deal volume with a 46% share. Last year’s major transactions with foreign participation were Zynga – Peak Games with USD 1.8 bn, IMTIS Holdings – Turkcell with USD 333.6 mn, and Qatar Investment Authority – Borsa Istanbul Stock Exchange with USD 200.0 mn.
Jan. 5, 2021

 

Politics

Turkey and UK sign FTA
A free trade agreement (FTA) between Turkey and the UK has been signed, coming into force on Jan. 1, 2021. The FTA comprises all industrial and agricultural products. The UK has been Turkey’s second largest export destination with a volume of USD 10.1 bn, and 11th largest source of imports with USD 5.0 bn in the first 11 months of 2020.
Dec. 29, 2020

Turkey starts Covid-19 vaccination
3 million doses of the Covid-19-vaccine of Chinese manufacturer Sinovac have arrived in Turkey on December 30. The first vaccinations have started following an analysis process of 14 days. The initial groups of citizens being vaccinated are healthcare workers, people over 65, police officers, teachers, and nursing home employees. 47 million more doses of the CoronaVac vaccine shall be gradually delivered to Turkey in the forthcoming period.
Jan. 14, 2021

 

Economy

Turkish Central Bank increases interest rate
The Central Bank of the Republic of Turkey has increased its policy rate (one-week repo auction rate) to 17.00%, up from 15.00%. The bank stated that “Domestic demand conditions, cumulative cost effects, in particular the exchange rate effects, increasing international food and other commodity prices and deterioration in inflation expectations continue to affect the pricing behaviour and inflation outlook adversely”. Hence, the bank has decided to implement a strong monetary tightening.
Dec. 24, 2020

Gross minimum wage raised to TRY 3,577.50
The relevant committee has announced the minimum wage negotiated for 2021: With a 21.6% increase compared to the previous year, it now amounts to TRY 3,577.50 gross, or net for unmarried employees without children TRY 2,825.90, and for married employees up to TRY 3,013.72 depending on the number of children. The cost to the employer is TRY 4,203.56.
Dec. 28, 2020

Import increase of 15.9% in November
In November 2020, the exports of the Turkish economy decreased by 0.9%, whereas imports increased by 15.9% over the same month of the previous year (YOY). With exports decreasing to USD 16.1 bn, and imports increasing to USD 21.1 bn, the trade deficit surged 153.5% to reach USD 5.0 bn. In November, the main partner for exports continued to be Germany (USD 1.5 bn), ahead of the UK (USD 1.1 bn), and Iraq (USD 953 mn). Germany was the country where the most imports to Turkey came from (USD 2.4 bn), followed by China (USD 2.2 bn) and Russia (USD 1.7 bn).
Dec. 31, 2020

Inflation increases
In December 2020, consumer prices in Turkey rose by 1.25% in comparison to the previous month, with the CPI going up by 14.60% YOY. The highest monthly rise was registered in furnishings and household equipment (3.46%), ahead of transportation (2.64%). The highest decrease was in clothing and footwear with -3.18%. The biggest annual increases were in miscellaneous goods & services (28.12%), and transportation (21.12%). The domestic producer price index (D-PPI) increased by 2.36% monthly, and by 25.15% YOY.
Jan. 4, 2021

Unemployment announced as 12.7% in October
In October 2020, some 4,005,000 people in Turkey aged 15 and older were officially out of work. Like in September the unemployment rate was 12.7%, a 0.7-point decrease YOY. The youth unemployment rate in the 15-24 age bracket dropped to 24.9%. The labour force participation rate went down to 50.0% in total, and to 31.3% for females. Of those with employment in this period, 55.7% were employed in the service sector, 20.3% in industry, 17.6% in agriculture, and 6.4% in construction.
Jan. 11, 2021

Industrial production increases by 11.0%
Turkey’s industrial production index in November went up by 11.0% YOY, with the manufacturing industry recording an increment of 11.6%. The highest increases in the manufacturing industry category took place in the product groups “computer, electronic and optical products” (28.5%), “basic pharmaceutical products and pharmaceutical preparations” (28.4%), and “wood and products of wood and cork” (25.7%). The highest decreases, on the other hand, were reported in “other transport equipment” (-8.0%), “coke and refined petroleum products” (-6.8%), and “leather and related products” (-5.5%).
Jan. 13, 2021

Overview of Monthly Data

Growth Rates

Inflation