Turkey News March 2021

Covid-19 Status

(as of March 17, 2021)

Business

Haier invests EUR 40 mn in Eskişehir
Chinese white goods producer Haier has started manufacturing dryers in Eskişehir following a EUR 40 mn investment. The production capacity at the new site shall be 1 million units in the first year, and be expanded to 1.5 million units in the next years. The plant is expected to generate close to 1,000 new jobs.
Feb. 1, 2021

Xiaomi starts production in Istanbul
Beijing-based multinational electronics giant Xiaomi plans to start production in its new facility in Avcılar/Istanbul soon, with an investment volume of USD 30 mn. The company has set a production target of 5 million smartphones per year with some 2,000 employees.
Feb. 4, 2021

Masterbaker acquires stakes in Arolez Gıda
UAE-headquartered Masterbaker Marketing FZCO, a subsidiary of SwitzGroup, has acquired an undisclosed stake at Arolez Gıda, a 35-year-old Turkish ice cream and pastry product manufacturer. This is the second investment of SwitzGroup in Turkey, following the acquisition of 50% shares of Mildo Food, a bakery ingredients producer, in 2014.
Feb. 4, 2021

VAT withholding rates revised
According to a communiqué issued on February 16 and effective as of March 1, the VAT withholding rates have been increased, and the scope of the practice has been widened. Insurance and reinsurance companies, trade unions, foundation universities, and mobile electronic communications operators have also been included among the entities subject to the withholding scheme, as well as providers of commercial advertising services.
Feb. 17, 2021

Karsan launches Europe’s first Level-4 autonomous bus
Bursa-based commercial vehicle producer Karsan has started the global launch of Otonom Atak Electric, the first Level-4 autonomous bus in Europe and the USA. The autonomy software of the vehicle was developed by another Turkish-owned company, Adastec. The electrical autonomous bus has a maximum range of 300 km and a maximum speed of 50 kph.
Mar. 1, 2021

Short-time compensation and ban on dismissals extended
The regulation that allows companies forced to discontinue their activities due to the coronavirus pandemic to benefit from short-time compensation for their employees has been extended until March 31. Furthermore, the ban on dismissals shall also remain in force for two more months after March 17.
Feb. 19-Mar. 9, 2021

Remote working regulation enters into force
The Turkish Ministry of Family, Labour and Social Services has issued a new regulation on remote working which has come into force on March 10. The regulation describes what conditions employment agreements regarding remote working should include, and how the existing agreements can be transformed into remote working agreements. According to the regulation, the employer is responsible for providing the materials needed to work remotely and taking the occupational safety precautions. On the other hand, the employee is required to comply with the company rules regarding data protection.
Mar. 10, 2021

 

Politics

Erdoğan announces normalization plan
Turkish President Recep Tayyip Erdoğan has announced new normalization steps regarding the coronavirus measures. Accordingly, the provinces have been categorized as low, medium, high, and very high risk. Istanbul and Izmir have been categorized as high risk, and Ankara as medium risk. Restaurants and cafés have been allowed to open between 7 am and 7 pm with 50% capacity, except in the “very high risk” provinces. The weekend lockdown has been completely lifted for the “low risk” and “medium risk” provinces, and limited to Sundays for the “high risk” and “very high risk” provinces. The general lockdown between 9 pm and 5 am continues.
Mar. 2, 2021

Erdoğan and Putin break ground for the third reactor of the nuclear plant
The ground-breaking ceremony for the third reactor of Turkey’s first nuclear plant has been held in Akkuyu (Mersin province) with the participation of Turkish President Recep Tayyip Erdoğan and Russian President Vladimir Putin via video conference. The plant is been being built by Russian state corporation Rosatom. The ground for the fourth reactor is scheduled to be broken next year, and the first reactor is to be commissioned in 2023.
Mar. 11, 2021

 

Economy

Fitch revises Turkey’s outlook to stable
Fitch Ratings has kept Turkey’s Long-Term Foreign Currency Issuer Default Rating at non-investment grade BB-, whereas the country’s outlook was revised to stable. The agency stated that “Monetary policy has been significantly tightened, international reserves have stabilised and the Turkish lira has appreciated by 18% against the US dollar since early November”.
Feb. 20, 2021

Export increase of 2.3% in January
In January 2021, the exports of the Turkish economy increased by 2.3%, whereas imports decreased by 5.9% over the same month of the previous year (YOY). With exports increasing to USD 15.1 bn, and imports decreasing to USD 18.1 bn, the trade deficit decreased by 32.8% to USD 3.0 bn. In January, the main partner for exports continued to be Germany (USD 1.5 bn), ahead of the USA (USD 933 mn), and Italy (USD 864 mn). China was the country where the most imports to Turkey came from (USD 2.2 bn), followed by Russia (USD 1.8 bn) and Germany (USD 1.5 bn).
Feb. 26, 2021

Turkish economy grew by 1.8% in 2020
In the fourth quarter of 2020, Turkey’s GDP grew by 5.9% compared with the same period of the previous year. Accordingly, the annual GDP in 2020 was announced as TRY 5.1 tn (USD 717.1 bn), and the annual growth as 1.8%. The private and public consumption contributed to growth in 2020 by 1.9 and 0.3 points, respectively, and investments by 1.6 points, whereas the contribution of net exports was negative with -5.5 points. Among the activities constituting the GDP, agriculture grew by 4.8%, the industry by 2.0%, whereas the construction and the service sectors contracted by 3.5% and 4.3%, respectively. The GDP per capita at current prices dropped to USD 8,599.
Mar. 1, 2021

Inflation continues to increase
In February 2021, consumer prices in Turkey rose by 0.91% in comparison to the previous month, with the CPI going up by 15.61% YOY. The highest monthly rise was registered in health (3.00%), ahead of food and non-alcoholic beverages (2.57%). The highest decrease was in miscellaneous goods & services with -2.32%, followed by recreation and culture (-0.98%). The biggest annual increase was in furnishings & household equipment (23.74%). The domestic producer price index (D-PPI) increased by 1.22% monthly, and by 27.09% YOY.
Mar. 3, 2021

Unemployment announced as 13.4% in January
In January 2021, some 4,194,000 people in Turkey aged 15 and older were officially out of work. The unemployment rate was 13.4%, a 0.7-point decrease YOY. The labour force participation rate went down to 49.5% in total, and to 30.6% for females. Of those with employment in this period, 55.4% were employed in the service sector, 21.8% in industry, 17.3% in agriculture, and 5.5% in construction.
Mar. 10, 2021

FDI decrease of 15.5% in 2020
The volume of foreign direct investments (FDI) in Turkey has decreased by 15.5% in 2020 to USD 7.8 bn. With USD 1.4 bn, the finance and insurance activities were the main sector attracting FDI, closely followed by information and communication services with USD 1.4 bn, and manufacturing industry with USD 1.1 bn. With USD 394 mn, the production of chemicals and pharmaceuticals was the main sub-sector in the manufacturing industry, followed by the manufacture of computers, electronic-electrical and optical equipment with USD 125 mn. As a region, Europe was the biggest source of FDI, and the leading countries were Italy, the USA, the Netherlands, the UK, and Luxembourg.
Mar. 10, 2021

Industrial production increases by 11.4%
Turkey’s industrial production index in January went up by 11.4% YOY, with the manufacturing industry recording an increment of 12.1%. The highest increases in the manufacturing industry category took place in the product groups “machinery and equipment n.e.c.” (27.5%), “computer, electronic and optical products” (27.0%), and “other non-metallic mineral products” (26.7%). The highest decreases, on the other hand, were reported in “other transport equipment” (-24.7%), “leather and related products” (-22.1%), “coke and refined petroleum products” (-16.4%).
Mar. 12, 2021

Turkish Central Bank increases interest rate again
The Central Bank of the Republic of Turkey has increased its policy rate (one-week repo auction rate) from 17.00% to 19.00%. The bank stated that it has decided to implement an additional monetary tightening, considering the upside risks to inflation expectations, pricing behaviour and the medium-term inflation outlook.
Mar. 18, 2021

Overview of Monthly Data

Growth Rates

Inflation