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Turkey News March 2023

Business

Koç, Ford and LG agree on joint battery cell production
LG Energy Solution, Ford Motor Co., and Turkish industrial conglomerate Koç Holding have signed a memorandum of understanding to establish a joint venture for battery cell production in Ankara. The ground-breaking is planned for later this year, with production to begin in 2026. The plant’s annual production capacity shall initially be 25 GWh, expanding to 45 GWh by 2029.
Feb. 22, 2023

Additional customs duty on Chinese electric vehicles
By virtue of a new presidential decree, an additional customs duty of 40% has been introduced for electric vehicles imported from China. Currently the MG, Seres, and Skywell brands are active in Turkey with their models made in China. In addition, BYD, Chery, and Tesla had plans to introduce their Chinese-manufactured e-cars to the Turkish market.
Mar. 3, 2023

New relief measures announced for earthquake victims
In the aftermath of the devastating earthquakes in the country’s Southeast, which claimed more than 47,000 lives, the Turkish government has announced new relief measures. A short-time allowance is being provided to disaster victims in those regions, and a ban on dismissals will be in force throughout the 3-month state of emergency that has been declared. Furthermore, an additional tax of 10% will be levied on the discounts and exemptions claimed by companies in their 2022 income tax returns, except for companies in the 11 provinces affected by the earthquakes.
Feb. 23 – Mar. 8, 2023

EBRD to support earthquake reconstruction
The European Bank for Reconstruction and Development (EBRD) has allocated EUR 1.5 bn for investments to be made in the next two years in Turkey’s earthquake-stricken regions. This support is aimed at the recovery, rebuilding and reintegration of the region’s economy to protect human capital, livelihoods and jobs in the provinces hit by the earthquake.
Mar. 10, 2023

 

Politics

UAE-Türkiye partnership agreement signed
At the signing ceremony of the “Türkiye-UAE Comprehensive Economic Partnership Agreement”, Turkish President Erdoğan expressed his confidence that the trade volume between the two countries will increase to USD 25 bn in the next five years. Saeed Thani Hareb Al Dhaheri, the UAE’s Ambassador to Turkey, stated that customs duties on specific products and goods will be reduced by 82%, enhancing the intra-non-oil trade.
Mar. 5, 2023

General elections scheduled for May 14
Putting an end to speculations, President Recep Tayyip Erdoğan has announced that the parliamentary and presidential elections will be held on May 14, 2023. The presidential race is expected to be between the current officeholder Erdoğan (AKP), and the recently announced joint candidate of six opposition parties, Kemal Kılıçdaroğlu (CHP).
Mar. 10, 2023

 

Economy

Slight decrease of FDI in 2022
The volume of foreign direct investments (FDI) in Turkey decreased by 2.4% to USD 13.0 bn in 2022. The sector attracting the most FDI (USD 1.8 bn) was finance and insurance, followed by the wholesale and retail trade (USD 1.6 bn). With USD 529 mn, food products, beverages and tobacco was the main sub-sector in the manufacturing industry, ahead of computers, electronic-electrical and optical equipment with USD 372 mn. Among the regions of the world, Europe was the biggest source of FDI, the leading countries being Spain, the Netherlands, Switzerland, Germany, and the UK.
Feb. 14, 2023

Turkish Central Bank reduces interest rate
The Central Bank of the Republic of Turkey has reduced its policy rate (the one-week repo auction rate) from 9.00% to 8.50%. The bank stated that “it has become even more important to keep financial conditions supportive to preserve the growth momentum in industrial production and the positive trend in employment after the earthquake.”
Feb. 23, 2023

20.7% import hike in January
In January 2023, the exports of the Turkish economy increased by 10.3%, while imports were up 20.7% compared to the same month of the previous year (YOY). With exports of USD 19.4 bn, and imports of USD 33.6 bn, the trade deficit rose by 38.4% to USD 14.2 bn during the same period. In January, Germany remained Turkey’s primary export partner (USD 1.8 bn), leading the USA (USD 1.2 bn) and Russia (USD 1.0 bn). Russia continued to be the country accounting for the most imports to Turkey (USD 5.0 bn), ahead of Switzerland (USD 4.3 bn) and China (USD 3.6 bn).
Feb. 27, 2023

Turkish economy grew by 5.6% in 2022
In the fourth quarter of 2022, Turkey’s GDP grew by 3.5% compared with the same period of the previous year. Accordingly, the annual GDP in 2022 was announced as TRY 15.0 tn (USD 905.5 bn), and the annual growth as 5.6%. Among the activities constituting the GDP, services grew by 11.7%, industry by 3.3%, and agriculture by 0.6%, whereas the construction sector contracted by 8.4%. The GDP per capita at current prices officially increased to USD 10,655.
Feb. 28, 2023

Inflation continues to decrease
In February 2023, consumer prices in Turkey increased by 3.15% over the previous month, and the CPI went up by 55.18% YOY. The highest monthly increase took place in food and non-alcoholic beverages (7.36%), followed by education (5.69%). Decreases among the main product groups occurred in clothing and footwear (-1.76%) and alcoholic beverages and tobacco (-0.43%). The biggest annual price increment was in hotels, cafés and restaurants (74.34%). The domestic producer price index (D-PPI) increased by 1.56% monthly and by a full 76.61% YOY.
Mar. 3, 2023

Non-seasonally adjusted unemployment decreases
In January 2023, some 3,583,000 people in Turkey aged 15 and older were officially out of work. The non-seasonally adjusted unemployment rate of 10.3% was 0.1 points down over the previous month and 1.8 points lower YOY. The labour force participation rate decreased to 53.2% in total, and to 35.2% for females.
Mar. 10, 2023

Industrial production increases
In January, Turkey’s industrial production index increased by 4.5% YOY, and the manufacturing industry recorded a growth of 5.8%. The biggest increases in the manufacturing industry category occurred in the product groups “leather and related products” (42.5%), “computer, electronic and optical products” (26.4%), and “repair and installation of machinery and equipment” (24.2%). The highest decreases were reported in the product groups “printing and reproduction of recorded media” (-20.0%), “paper and paper products” (-12.4%), and “textiles” (-12.4%).
Mar. 10, 2023

 

Overview of Monthly Data

turkey economy march 2023 1

Growth Rates

turkey economy march 2023 2

Inflation

turkey economy march 2023 3