Turkey News October 2020
(as at October 19, 2020)
Umdasch acquires majority of Madosan
Austrian formwork and store-building company Umdasch Group intends to acquire 55% shares of the Turkish shelf systems producer Madosan, located in Bursa. Madosan has 125 employees and exports 65% of its production to 74 countries. Silvio Kirchmair, CEO of Umdasch The Store Makers, stated that this acquisition will provide their company with an extraordinary competitive production base.
Sep. 2, 2020
Erdoğan inaugurates new highway
The Turkish President Recep Tayyip Erdoğan has opened a new highway between the capital Ankara and the Cappadocian city of Niğde. The 275 km long section (330 km including access roads) will cut the travelling time between the two cities from over 4 down to under 2.5 hours.
Sep. 5, 2020
Yandex closes its office in Istanbul
The Russian search engine company Yandex has decided to close its office in Istanbul with 120 employees. However, the company is not going to leave the Turkish market, with the Moscow headquarters to manage the activities in Turkey in the forthcoming period. Yandex has been operating in Turkey since 2011.
Sep. 18, 2020
Limitation on dividend distribution extended
Pursuant to a presidential decree published on Sep. 18, the duration of the requirement for stock corporations to distribute dividends only up to 25% of their net profit for the year 2019 has been extended for three months until the end of 2020. This is part of the Turkish government’s package of measures to counteract the economic impact of the coronavirus pandemic.
Sep. 20, 2020
Additional customs duties to continue
The additional customs duties charged on around 5,000 product groups have been extended until the end of this year. The duties had been introduced by decrees on Apr. 18, Apr. 21, May 11, May 20, and June 28 to protect domestic production against imports during the pandemic.
Sep. 25, 2020
Tax on FX and gold trading cut
The banking and insurance transactions tax (BSMV) on purchases and sales of foreign exchange and gold has been decreased to 0.2%, down from 1%. Furthermore, the withholding tax on deposit accounts with longer than one-year maturity has been reduced to 0%, up to 1 year maturity to 3%, and up to 6 months maturity to 5%.
Oct. 1, 2020
Saudi Arabian business leader calls for boycott of Turkish products
Ajlan al-Ajlan, the head of Saudi Arabia’s Chambers of Commerce, has called for a boycott of Turkish exports, investment and tourism, due to the “hostility of the Turkish government” against S. Arabia. The relations between the two countries had recently deteriorated due to conflicts over policies in the Middle East and the murder of journalist Jamal Khashoggi. The volume of Turkey’s exports to Saudi Arabia was USD 3.3 bn in 2019, making this country Turkey’s 16th largest export destination.
Oct. 4, 2020
Turkey declares its full support of Azerbaijan
The Turkish Ministry of Foreign Affairs has condemned the attacks by Armenia on civilian settlements in Azerbaijan. The statement issued reaffirmed Turkey’s support for the stance of the Azerbaijani government to exercise its right of self-defence arising from international law. Meanwhile Canada has frozen its exports of unmanned air vehicle systems to Turkey until it is proven that Canadian military technology is not being used in the armed conflict between Armenia and Azerbaijan.
Oct. 4-6, 2020
EU issues 2020 Report on Turkey
According to the annual report presented by the European Commission, concerns remained over the lack of independence of the Turkish judiciary, and the deterioration of the human rights situation continued. Tensions with the EU increased when Turkey’ government encouraged refugees to take the land route to Europe and when natural gas exploration in the Eastern Mediterranean began. The economic recovery after the currency depreciation in 2018 remained fragile, given the weak labour market and the need to repair corporate balance sheets.
Oct. 7, 2020
Erdoğan sponsors re-opening of Cypriot resort ghost town
Ahead of presidential elections in the Turkish Republic of Northern Cyprus (TRNC), the government has partially opened the beach of Maraş (formerly Varosha) to the public. This former touristic town had been abandoned by its inhabitants during Turkey’s military intervention in Cyprus in 1974 and since been off limits. Turkish President Erdoğan supported the move, claiming that the town belongs to the territory of the TRNC, whereas Stéphane Dujarric, the spokesperson of UN Secretary‑General António Guterres, stated any unilateral actions that could trigger tensions on the island should be avoided.
Oct. 8, 2020
Moody’s lowers Turkey’s rating
The credit rating agency Moody’s has lowered Turkey’s credit rating to the non-investment grade B2 while keeping the country’s outlook at negative. The agency emphasized increasing external vulnerabilities, the questionable ability of institutions to address the challenges as the risks to the country’s credit profile increase, and an erosion of fiscal buffers.
Sep. 12, 2020
Turkish Central Bank increases interest rate
The Central Bank of the Republic of Turkey has increased its policy rate (one-week repo auction rate) from 8.25% to 10.25%. According to the bank, the economic activity has been recovering in the third quarter, and a normalization trend in consumer loans has started. As a result of the fast economic recovery with a strong credit momentum, as well as the developments in the financial market, inflation has followed a higher-than-envisaged path. Hence, the bank has decided to take a tightening step in order to contain risks to the inflation outlook.
Sep. 24, 2020
Import increase of 20.4% in August
In August 2020, the exports of the Turkish economy decreased by 5.7%, whereas imports increased by 20.4% over the same month of the previous year (YOY). With exports decreasing to USD 12.5 bn, and imports increasing to USD 18.7 bn, the trade deficit surged 168.2% to reach USD 6.3 bn. In August, the main partner for exports continued to be Germany (USD 1.2 bn), ahead of the UK (USD 989 mn), and the USA (USD 740 mn). China was the country where the most imports to Turkey came from (USD 1.9 bn), followed by Germany and Iraq with USD 1.7 bn each.
Sep. 30, 2020
New Economy Programme announced
Berat Albayrak, the Minister of Treasury and Finance, has presented the government’s new economy programme covering the next three years. Accordingly, Turkey’s economy is expected to grow by 0.3% in 2020, by 5.8% in 2021, and by 5.0% in the following two years. The unemployment rate target for 2023 has been set at 10.9%, and the inflation rate target at 4.9%.
Sep. 30, 2020
Inflation remains almost unchanged
In September 2020, consumer prices in Turkey rose by 0.97% in comparison to the previous month. The CPI went up by 11.75% YOY. The highest monthly rise was registered in furnishings & household equipment (3.02%), ahead of transportation (1.84%). The expenditure groups that reported an ever-so-slight drop were education with -0.07%, and clothing & footwear with -0.03%. The biggest annual increases were in miscellaneous goods & services (25.17%), and health (15.09%). The domestic producer price index (D-PPI) increased by 2.65% monthly, and by 14.33% YOY.
Oct. 5, 2020
Unemployment announced as 13.4% in July
In July 2020, some 4,227,000 people in Turkey aged 15 and older were officially out of work. The unemployment rate was 13.4%, a 0.5-point decrease YOY. The youth unemployment rate in the 15-24 age bracket dropped to 25.9%. The labour force participation rate went down to 50.3% in total, and to 31.7% for females. Of those with employment in this period, 54.9% were employed in the service sector, 19.6% in industry, 19.4% in agriculture, and 6.1% in construction.
Oct. 12, 2020
Industrial production keeps improving
Turkey’s industrial production index in July went up by 10.4% YOY, with the manufacturing industry recording an increment of 11.4%. The highest increases in the manufacturing industry category took place in the product groups “tobacco products” (30.2%), “other manufacturing” (26.7%), and “other non-metallic mineral products” (23.4%). The highest decreases, on the other hand, were reported in “computer, electronic and optical products” (-25.6%), “coke and refined petroleum products” (-3.7%), and “leather and related products” (-3.5%).
Oct. 13, 2020
Overview of Monthly Data