Turkey News May 2021

Covid-19 Status

(as of May 16, 2021)

Business

Alibaba acquires additional shares of Trendyol
The Chinese e-commerce giant Alibaba has increased its share in one of Turkey’s leading e-commerce platforms, Trendyol, to 86.5% by investing USD 350 mn. Alibaba had already acquired 75% of the company in 2018. With this new investment, Trendyol’s value has reached USD 9.3 bn.
Apr. 23, 2021

Corporate income tax increased to 25%
An omnibus law raising the corporate income tax for income derived in 2021 to 25% has entered into force. The new rate shall be applied to tax returns submitted as from July 1, 2021. The tax rate has been set at 23% for income derived in 2022.
Apr. 23, 2021

Additional customs duties revised
The additional customs duties charged on 4,815 product groups, and varying between 1.9% to 30%, have been revised by a new presidential decree. Accordingly, the duties have been decreased for some of the products, and removed for others. Imports from the EU and EFTA countries had already been exempted from these duties.
Apr. 23, 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 the end of June. Furthermore, the VAT reductions in the tourism sector and the ban on dismissals shall also remain in force until the same date.
Apr. 22-29, 2021

Vivo starts production in Turkey
Following Oppo and Xiaomi, another Chinese smartphone manufacturer, Vivo, has decided to produce in Turkey. The production is planned to commence in May at the new facility in Gebze (Kocaeli province). The USD 25 mn investment shall be completed within two years, creating 2,000 jobs.
Apr. 30, 2021

Politics

Erdoğan appoints new ministers
Turkish President Recep Tayyip Erdoğan has appointed three new ministers. Ruhsar Pekcan, Minister of Trade, has been replaced by Mehmet Muş, deputy group chairman of the ruling party AKP. Zehra Zümrüt Selçuk, Minister of Family, Labour and Social Services, was also dismissed and her portfolio divided as before, with Vedat Bilgin taking over as Minister of Labour and Social Security, and Derya Yanık as Minister of Family and Social Services.
Apr. 22, 2021

Biden recognizes “Armenian Genocide”
With the U.S. Congress having recognized the 1915–17 “genocide” of ethnic Armenians in the Ottoman Empire in 2019, President Joe Biden has now followed suit in a remembrance day statement. Turkish politicians widely criticized this move, with President Erdoğan saying that the issue should be discussed by historians and not be politicized by third parties.
Apr. 26, 2021

Turkish officials visit Egypt
The deputy foreign ministers of Egypt and Turkey have met in Cairo to discuss steps towards the normalization of their countries’ relations. This was the first direct contact between the two nations since the coup d’état that brought General el-Sisi to power in 2013.
May 6, 2021

Turkey proceeds to gradual normalization
Following the “full lockdown” imposed from Apr. 29 until May 17 due to the rise in the country’s number of coronavirus cases, the Turkish government has announced a gradual transition to normalization, which will last until June 1. Accordingly, the lockdown during the weekdays shall be implemented only between 9 pm to 5 am, whereas the weekend lockdown shall continue. Travel across province borders by private car shall continue be prohibited except in compelling circumstances, whereas travel by public transportation has been allowed. Cafés and restaurants must provide takeaway and delivery service only.
May 16, 2021

Economy

Export surge of 42.2% in March
In March 2021, the exports of the Turkish economy rose by as much as 42.2%, whereas imports were up 25.6% over the same month of the previous year (YOY). With exports increasing to USD 19.0 bn, and imports to USD 23.6 bn, the trade deficit decreased by 14.9% to USD 4.7 bn. In March, 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 1.1 bn). China was again the country where the most imports to Turkey came from (USD 2.8 bn), followed by Russia (USD 2.5 bn) and Germany (USD 2.2 bn).
Apr. 30, 2021

Inflation continues to increase
In April 2021, consumer prices in Turkey rose by 1.68% in comparison to the previous month, with the CPI going up by 17.14% YOY. The highest monthly rise was registered in clothing and footwear (7.57%), ahead of food and non-alcoholic beverages (2.13%). Slight decreases occurred in communication (-0.28%) and furnishing and household equipment (-0.03%). The biggest annual price increase was in transportation (29.31%). The domestic producer price index (D-PPI) rose by 4.34% monthly, and by 35.17% YOY.
May 3, 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%. According to the bank, “demand and cost factors, supply constraints in some sectors, and high levels of inflation expectations continue to pose risks to the pricing behaviour and inflation outlook”, which is the reason for maintaining its tight monetary policy.
May 6, 2021

Unemployment announced as 13.1% in March
In March 2021, some 4,193,000 people in Turkey aged 15 and older were officially out of work. The non-seasonally adjusted unemployment rate was 13.1%, a 0.1-point increase YOY. The labour force participation rate increased to 50.6% in total, and to 31.4% for females. Of those with employment in this period, 54.7% were employed in the service sector, 22.2% in industry, 16.5% in agriculture, and 6.6% in construction.
May 10, 2021

Industrial production increases by 16.6%
Turkey’s industrial production index in March went up by 16.6% YOY, with the manufacturing industry recording an increment of 17.2%. The highest increases in the manufacturing industry category took place in the product groups “machinery and equipment n.e.c.” (34.6%), “motor vehicles, trailers and semi-trailers” (30.2%), and “electrical equipment” (29.0%). Decreases, on the other hand, were reported in “tobacco products” (-15.7%), “coke and refined petroleum products” (-5.6%), and “repair and installation of machinery and equipment” (-2.6%).
May 11, 2021

Foreign investments slow down in 2020
In 2020, the share of foreign capital companies in the total volume of investment incentive certificates issued by the Ministry of Industry and Technology has decreased to 8%, far below the past 10 years’ average of 22%. The uncertainty caused by the pandemic was cited as the main reason of this marked decline.
May 11, 2021

Overview of Monthly Data

Growth Rates

Inflation