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Turkey News July 2023


Skywell to invest in battery production in Turkey
Chinese e-car manufacturer Skywell, in cooperation with its local distributor Ulu Motor, is going to open a factory in Turkey for the development and production of batteries for electric vehicles. The plant is to be commissioned in the first quarter of 2024 following an investment of USD 25 mn. According to Skywell Founding Partner and CEO Wu Longba, his company’s plans include establishing a vehicle production line in Turkey, introducing a spare part supply system, and manufacturing certain parts.
June 19, 2023

World Bank to provide USD 1 bn financing to Turkey
The World Bank has approved USD 1 bn in funds to help restore rural housing and basic utilities in the earthquake-affected areas of Turkey. Notably this is the largest single financing package ever provided by the World Bank to Turkey, with the main objectives of the project including the restoration of municipal infrastructure and health services as well as the construction and improvement of rural dwellings.
June 28, 2023

Numerous taxes and fees increased
With a new Presidential Decree, the VAT rate of currently 18 per cent has been raised to 20 per cent, and the 8 per cent reduced VAT rate to 10 per cent. In addition, the fees collected in many areas, including passport, work permit, land registry and cadastre, mortgage, litigation, notary, visa, and license fees, have been increased by 50%. In addition, with the accepted article of a law proposal, the corporate income tax has gone up from 20 per cent to 25 per cent. The regulation that caps the increases to be applied to housing rents at 25 per cent has been extended until July 1, 2024. Furthermore, the excise duty charged on the litre price of gasoline has been increased from TRY 2.52 to TRY 7.52, and the tax on diesel has been increased from TRY 2.05 to TRY 7.05.
July 7-17, 2023



Turkey and Egypt restore diplomatic ties to ambassadorial level
Turkey and Egypt have restored diplomatic ties to the ambassadorial level with the aim of further normalizing their mutual relations. Reportedly Turkey has appointed Salih Mutlu Şen as its ambassador to Cairo, while Amr El Hamamy was named Egypt’s ambassador to Ankara. Diplomatic relations between the two countries had been reduced to the level of chargé d’affaires since 2013.
July 5, 2023

Erdoğan hosts Zelenskyy in Istanbul
Turkish President Recep Tayyip Erdoğan has hosted Ukrainian President Volodymyr Zelenskyy in Istanbul. Erdoğan declared that Ukraine deserves NATO membership, and that his country will give all kinds of support for the reconstruction in Ukraine. Zelenskyy thanked Turkey for its support of the Black Sea Grain Initiative.
July 8, 2023

Turkey gives up resistance to Sweden’s NATO membership
President Erdoğan has met with NATO Secretary General Jens Stoltenberg and Swedish Prime Minister Ulf Kristersson in Vilnius, the capital of Lithuania. Sweden reiterated that it would not support terrorist organizations, and made a commitment to support Turkey’s European Union accession process. Turkey also agreed to speedily send Sweden’s protocol to join NATO to the Turkish Grand National Assembly, and to ensure its approval. At the NATO Summit, Erdoğan also met with US President Joe Biden, French President Emmanuel Macron, British Prime Minister Rishi Sunak, Canadian Prime Minister Justin Trudeau, Italian Prime Minister Giorgia Meloni, and German Chancellor Olaf Scholz.
July 11, 2023


Turkish Central Bank boosts interest rate
Under new leadership, the Central Bank of the Republic of Turkey has massively increased its policy rate (the one-week repo auction rate) – from 8.50% to 15.00%. The bank stated that it has “decided to begin the monetary tightening process in order to establish the disinflation course as soon as possible, to anchor inflation expectations, and to control the deterioration in pricing behaviour.”
June 22, 2023

Both exports and imports increase in May
In May 2023, the exports and imports of the Turkish economy increased by 14.4% and 15.5%, respectively, compared to the same month of the previous year (YOY). With exports of USD 21.7 bn and imports of USD 34.2 bn, the trade deficit rose by 17.6% to USD 12.5 bn during the same period. In May, Germany remained Turkey’s primary export partner (USD 1.8 bn), leading the USA (USD 1.3 bn) and the UK (USD 1.1 bn). Russia continued to be the country accounting for the most imports to Turkey (USD 4.6 bn), ahead of China (USD 4.4 bn) and Germany (USD 2.7 bn).
June 23, 2023

Inflation continues to slow down
In June 2023, consumer prices in Turkey increased by 3.92% over the previous month, while the CPI went up by 38.21% YOY. The highest monthly price hike took place in alcoholic beverages and tobacco (11.13%), followed by transportation (7.96%). No decrease occurred among the main product groups. The biggest annual price increment was in hotels, cafés and restaurants (67.22%). The domestic producer price index (D-PPI) increased by 6.50% monthly, and by 40.42% YOY.
July 5, 2023

Seasonally adjusted unemployment decreases
In May 2023, some 3,328,000 people in Turkey aged 15 and older were officially out of work. The seasonally adjusted unemployment rate of 9.5% was 0.5 points lower than in the previous month, and 1.3 points lower YOY. The labour force participation rate was 53.6% in total, and 36.1% for females.
July 10, 2023

Industrial production continues to stagnate
In May, Turkey’s industrial production index decreased by 0.2% YOY, whereas the manufacturing industry slightly grew by 0.6%. The biggest increases in the manufacturing industry category occurred in the product groups “other transport equipment” (51.5%), “motor vehicles, trailers and semi-trailers” (22.2%), and “tobacco products” (20.8%). The highest decreases were reported in the product groups “coke and refined petroleum products” (-19.9%), “printing and reproduction of recorded media” (-14.9%), and “paper and paper products” (-13.3%).
July 12, 2023

Minimum wage raised by 34%
In view of the high inflation rate, the competent commission has agreed on a regular increase of the minimum wage by 34% as from July. The statutory minimum wage now amounts to TRY 13,414.50 gross – translating into TRY 11,402.32 net – with the cost to the employer being TRY 15,762.04. The minimum wage premium support to be deducted from the insurance premium payable by employers has been increased to monthly TRY 500 per employee.
June 21-July 17, 2023


Overview of Monthly Data

Growth Rates