Turkey News June 2021

Covid-19 Status

(as of June 20, 2021)

Business

Excise duty on fuel products increased
By a presidential decree, the excise duty (called special consumption tax) on fuel products has been increased sharply by approx. 54% for petrol, 78% for diesel fuel, and 189% for LPG autogas. Accordingly, fuel prices per litre went up TRY 0.55 for 95 octane petrol, TRY 0.67 for diesel, and TRY 0.35 for LPG.
May 20, 2021

Mitsubishi Electric Corporation expands capacity
Mitsubishi Electric Corporation plans to invest USD 18 mn in its existing air conditioning systems plant in Manisa province for technology renewal and capacity expansion. With this investment, the plant’s production capacity is expected to double to 1 million units of air-to-water heat pumps and air conditioners. The new production line is to be operational by August 2022.
May 28, 2021

TCL smart phone plant put into operation
Chinese consumer electronics giant TCL Technology has commissioned its smart phone plant built in Tekirdağ province in cooperation with leading Turkish household appliances manufacturer Arçelik. The initial annual production capacity of 450,000 phones is to gradually increase to 1 million phones by 2022.
May 30, 2021

Coronavirus tax breaks extended
Within the scope of the coronavirus mitigation measures implemented by the Turkish government, 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 for another two months, until July 31.
June 3, 2021

Public receivables restructuring law in effect
The law on the restructuring of certain public receivables has come into effect with its publication on June 9. The law covers a variety of receivables, including tax and social security premium liabilities, motor vehicle tax, and customs duties. Debtors wishing to benefit from these facilities must submit their applications by August 31.
June 10, 2021

Additional natural-gas reserves discovered
President Recep Tayyip Erdoğan has announced that the Turkish exploration ship “Fatih” has encountered another natural gas reserve of 135 billion cubic metres in the Black Sea, in addition to the 405 billion cubic metres discovered last year. Natural gas production from this site had been scheduled to start in 2023.
June 4, 2021

Politics

EP plenary adopts report on Turkey
The European Parliament has adopted its Foreign Affairs Committee’s 2019-2020 Report on Turkey, which voices unprecedentedly strong criticism on various topics including human rights, democracy, the rule of law, the governmental system, and the Eastern Mediterranean issue. The Turkish Ministry of Foreign Affairs was quick to rebuke the report as not objective and unacceptable. The EP has also recommended formally suspending the accession negotiations if Turkey does not reverse this negative trend.
May 21, 2021

Erdoğan confers with U.S. business leaders
Turkish President Recep Tayyip Erdoğan has got together with senior executives of U.S. companies in a video conference hosted by the Investment Office of the Republic of Turkey, the United States Chamber of Commerce, and the Turkish Embassy in Washington, D.C. The participants included executives of Boeing, Amazon, Microsoft, Kellogg’s, PepsiCo, Cisco, P&G, and J&J. Erdoğan briefed the company execs on Turkey’s investment landscape and economic prospects.
May 28, 2021

Turkey proceeds to normalization
The Turkish government has announced a gradual transition to normalization regarding the measures taken against the pandemic, to come into effect as of June 1. Accordingly, the lockdown on weekdays and Saturdays shall be implemented only from 10 pm to 5 am, whereas the lockdown on Sundays continues. During lockdown hours, travel across province borders by private car remains prohibited except in compelling circumstances, whereas there are no restrictions to travel by public transportation. Cafés and restaurants have been allowed to accept customers on weekdays and Saturdays between 7 am and 9 pm with proper precautions. Following the cabinet meeting on June 21, President Erdoğan announced that the lockdown will be completely lifted as of July 1.
June 1-22, 2021

Economy

Over 100 % export surge in April
In April 2021, the exports of the Turkish economy rose by as much as 109.2%, whereas imports were up 61.1% over the same month of the previous year (YOY). With exports increasing to USD 18.8 bn, and imports to USD 21.8 bn, the trade deficit decreased by 33.2% to USD 3.1 bn. In April, the main partner for exports continued to be Germany (USD 1.7 bn), ahead of the USA (USD 1.2 bn), and the UK (USD 1.0 bn). China was again the country where the most imports to Turkey came from (USD 2.4 bn), followed by Russia (USD 2.2 bn) and Germany (USD 2.1 bn).
May 28, 2021

7.0% economic growth in Q1 2021
Turkey’s GDP in the first quarter of 2021 increased by 7.0% compared with the same period of the previous year. The quarterly GDP at current prices reached TRY 1,386.3 bn, and USD 188.1 bn in dollar terms. The manufacturing industry grew by 12.2%, agriculture by 7.5%, the services sector by 5.9%, and the construction industry by 2.8%.
May 31, 2021

Inflation slowing down
In May 2021, consumer prices in Turkey rose by 0.89% in comparison to the previous month, with the CPI going up by 16.59% YOY. The highest monthly rise was registered in transportation (2.56%), ahead of clothing & footwear (1.76%). Decreases occurred in recreation & culture (-1.32%), and alcoholic beverages & tobacco (-0.01%). The biggest annual price increase was in transportation (28.39%). The domestic producer price index (D-PPI) rose by 3.92% monthly, and by 38.33% YOY.
June 3, 2021

Unemployment announced as 12.9% in April
In April 2021, some 4,166,000 people in Turkey aged 15 and older were officially out of work. The non-seasonally adjusted unemployment rate was 12.9%, a 0.1-point increase YOY. The labour force participation rate increased to 50.8% in total, and to 32.4% for females. Of those with employment in this period, 54.6% were employed in the service sector, 21.6% in industry, 17.7% in agriculture, and 6.2% in construction.
June 10, 2021

Industrial production gains 66.0%
Turkey’s industrial production index in April went up by as high as 66.0% YOY because of the high base effect, with the manufacturing industry recording an increment of 72.3%. The highest increases in the manufacturing industry category took place in the product groups “motor vehicles, trailers and semi-trailers” (355.3%), “textiles” (193.5%), and “leather and related products” (180.0%). The only decrease was reported in “tobacco products” (-12.0%).
June 11, 2021

Turkish Central Bank keeps interest rate constant
The Central Bank of the Republic of Turkey has kept its policy rate (the one-week repo auction rate) constant at 19.00%. As reason for maintaining its tight monetary policy, the bank stated: “In addition to the recent import-price-based cost factors, demand conditions, supply constraints in some sectors, and high levels of inflation expectations continue to pose risks to the pricing behaviour and inflation outlook”.
June 17, 2021

Overview of Monthly Data

Growth Rates

Inflation