Turkey News September 2020

Covid-19 Status

(as at September 13, 2020)

Business

Zynga acquires 80% of Rollic’s shares
U.S. entertainment giant Zynga, which had bought Istanbul-based Peak Games in June for USD 1.8 bn, has now acquired 80% shares of yet another Turkish game company, Rollic, for USD 168 mn. Zynga will consider buying the remaining 20% provided the profit targets are met. Rollic has more than 5 million active mobile users per day.
Aug. 7, 2020

Imerys acquires majority of Haznedar
French company Imerys, which is specialized in the production of industrial minerals, has decided to acquire 60% shares of Turkish company Haznedar Refrakter Sanayii, which produces high-grade refractory bricks. In 2019, Haznedar’s turnover was USD 64 mn, 40% of it stemming from exports.
Aug. 11, 2020

Nestlé to invest TRY 250 mn in medical nutrition
Nestlé’s Health Science division plans to open a medical nutrition production facility in Nestlé Turkey’s plant in Karacabey, Bursa province. The facility is to be commissioned in August 2021 to produce 29 different products. Nestlé plans to invest TRY 250 mn in this facility in the next three years.
Aug. 15, 2020

Turkey discovers sizeable natural gas reserve in the Black Sea
Turkish President Recep Tayyip Erdoğan has announced that the Turkish exploration ship “Fatih” has discovered a natural gas reserve of 320 billion cubic meters in its drilling operations in the Black Sea. While according to Erdoğan the gas will be available for use by 2023, some experts consider this too optimistic a target.
Aug. 22, 2020

Investment incentives revised
The investment incentives in Turkey have been revised by a presidential decree. In the regional investment incentives scheme, the regions of the provinces Tekirdağ, Adana, Adıyaman, Balıkesir, Karabük, Manisa, Düzce, Kırıkkale, Kütahya, Rize and Aksaray have been reassigned, affecting the available incentive amounts. Moreover, the way has been paved for less developed districts in 53 provinces to benefit from higher incentives. Furthermore, the duration of the VAT exemption on building and construction expenditures for investment purposes has been extended. Investments in energy saving, test centres for medium and high technology products, rail, sea and air transportation as well as software in specialized organized industrial zones have been prioritized.
Aug. 22-24, 2020

Invista and SASA sign agreement for PTA plant
Two chemicals producers, U.S. Invista, a subsidiary of the conglomerate Koch Industries, and Turkish SASA, have signed a licence and technical service agreement of USD 935 mn to invest in the world’s largest capacity plant manufacturing purified terephthalic acid (PTA) in a single line. The plant in the province of Adana, which is to create 400 jobs with an annual production capacity of 1.5 million tons, is scheduled for commissioning in 2022.
Aug. 27, 2020

Special excise duties on new cars revised
According to the revised rates of the special excise duty (ÖTV), the tax on automobiles with engines smaller than 1600 cc shall vary between 45 and 80%, depending on the tax base. The minimum tax base has been increased from TRY 70,000 to 85,000. The tax will be 130 to 150% for cars with engines between 1600 and 2000 cc, and 220% for cars with engines larger than 2000 cc. Lower taxes apply to electrical vehicles.
Aug. 31, 2020

Short-time compensation and ban on dismissals extended for two months
The duration of the regulation allowing companies forced to discontinue their activities due to the coronavirus pandemic to benefit from short-time compensation for their employees has been extended for two months until end of October. In parallel, the ban on dismissals has also been extended until November 17.
Sep. 1-5, 2020

 

Politics

Turkey and Libya sign trade agreements
The Turkish Ministry of Trade and the Libyan Ministry of Planning have signed economic and trade agreements in Ankara to complete 184 construction projects involving Turkish companies that had been stopped in 2011 due to the political developments in Libya. The total volume of the projects is USD 16 bn.
Aug. 14, 2020

Biden’s comments draw criticism from Turkey
U.S. Democratic presidential candidate Joe Biden’s recently reported comments in a New York Times interview in December 2019 caused reactions in Turkey. On this occasion, Biden said that the Turkish opposition should be supported against President Erdoğan, the Kurdish population needs to be integrated into the parliamentary process, and Erdoğan must be defeated in elections, not by a military coup. Fahrettin Altun, Director of Communications for the Office of the Turkish President, tweeted that “Biden’s remarks reflect the games being played over Turkey and their interventionist attitudes.”
Aug. 17, 2020

Economy

Turkish Central Bank keeps interest rate stable
The Central Bank of the Republic of Turkey has kept its policy rate (one-week repo auction rate) at 8.25%. According to the bank, the economic recovery is gaining pace, and recent measures contribute to financial stability. The recovery in exports of goods, low levels of commodity prices, and the level of the real exchange rate will support the current account balance in the forthcoming period. Depending on the course of the pandemic, uncertainties regarding domestic and external demand conditions remain significant.
Aug. 20, 2020

Fitch revises Turkey’s outlook downwards
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 negative. The agency cautioned against decreasing foreign exchange reserves, interventions to the exchange rate, the rise in credits and the current account deficit, and negative real interest rates, and found fault with the limited independence of the Central Bank.
Aug. 24, 2020

Turkish economy contracts by 9.9% in Q2 2020
Due to the coronavirus pandemic, Turkey’s GDP in the second quarter of 2020 decreased by 9.9% compared with the same period of the previous year. The quarterly GDP at current prices reached TRY 1,041.6 bn, but decreased to USD 153.2 bn in dollar terms. Agriculture grew by 4.0%, whereas the services sector contracted by as high as 25.0%, the manufacturing industry by 18.4%, and the construction industry by 2.7%.
Aug. 31, 2020

Import decrease of 7.9% in July
In July 2020, the exports of the Turkish economy decreased by 5.8%, and imports by 7.9% over the same month of the previous year (YOY). With exports decreasing to USD 15.0 bn, and imports to USD 17.7 bn, the trade deficit decreased by 18.2% down to USD 2.7 bn. In July, the main partner for exports continued to be Germany (USD 1.5 bn), ahead of the UK (USD 973 mn), and the USA (USD 952 mn). China was the country where the most imports to Turkey came from (USD 1.9 bn), followed by Germany (USD 1.8 bn), and Russia (USD 1.2 bn).
Aug. 31, 2020

Inflation remains about constant
In August 2020, consumer prices in Turkey increased by 0.86% in comparison to the previous month. The CPI went up by 11.77% YOY. The highest monthly rise was registered in the item miscellaneous goods & services (5.09%), ahead of transportation and hotels, cafés and restaurants, each with 1.56%. The expenditure groups that reported a drop were clothing and footwear with -2.11%, and food & non-alcoholic beverages with -0.08%. The biggest annual increases were in miscellaneous goods & services (26.99%), health (14.68%), and food & non-alcoholic beverages (13.51%). The domestic producer price index (D-PPI) increased by 2.35% monthly, and by 11.53% YOY.
Sep. 3, 2020

Unemployment announced as 13.4% in June
In June 2020, around 4,101,000 people in Turkey aged 15 and older were officially out of work. The unemployment rate was 13.4% with a 0.4-point increase YOY. The youth unemployment rate in the 15-24 age bracket increased to 26.1%. The labour force participation rate went down to 49.0% in total, and to 30.8% for females. Of those with employment in this period, 55.0% were employed in the service sector, 20.0% in industry, 19.3% in agriculture, and 5.8% in construction.
Sep. 10, 2020

Industrial production continues to improve
Turkey’s industrial production index in July increased by 4.4% YOY, and the manufacturing industry recorded an increment of 5.1%. The highest increases in the manufacturing industry category were in the product groups “other manufacturing” (27.7%), “printing and reproduction of recorded media” (26.0%), and “other non-metallic mineral products” (20.5%). The highest decreases, on the other hand, were observed in “other transport equipment” (-47.1%), “leather and related products” (-12.3%), and “motor vehicles, trailers and semi-trailers” (-5.3%).
Sep. 14, 2020

 

Overview of Monthly Data

Growth Rates

Inflation