Mr. Bader Arslan –Secretary General, Turkish Exporters Assembly
The world is back in business. As international trade flourishes and innovation is rewarded, the global economy has forecast growth of 3.9 per cent for this year and next, according to the IMF.
One of the biggest contributors to these figures was the booming Turkish economy, growing faster than any other of the world’s biggest economies at 7.4% in 2017 – double its growth rate of 3.2 in 2016.
But it wasn’t that long ago that Turkey was synonymous with baklava, apricots and convenient low-budget trips for the sun-deprived British public. More recently, Turkey’s taken full advantage of its geographic location and time zones, its strong business ties with Europe and Asia, and its increasingly multi-lingual, young, and educated population. It has made itself into a world-renowned centre of excellence for technology, engineering and creative industries. This transformation has translated into economic success, with GDP surging 11.3 per cent in the third quarter of 2017, with a forecast of 5 per cent for 2018.
So where has this growth come from, and which industries is Turkey rapidly becoming a world leader? We explore a couple of the key sectors below.
Turkey is already well established in the international fashion industry, with a reputation for high quality product and designers with a global reach. Although more expensive than their counterparts in Asia, Turkish manufacturers can offer faster delivery times and the flexibility to repeat in season. Asia cannot compete with Turkey’s close proximity to Europe, which allows buyers to quickly make repeat orders on products that are flying off the rails.
Leading Turkish brands can now be seen in malls and shopping streets across the world, from Las Vegas and Dubai to Berlin, Tokyo and Moscow. Sarar recently opened its 15th US store in Washington DC, and has announced its aim to have 100 US stores within the next 10 years. Sararalso recently opened its first store in Pakistan, while brands such as Mudo and İpekyol are making inroads into the Middle East.
Merve Bayindir, a UK-based female-led Turkish brand for the timeless stylish and self-confident woman, is a perfect example of why Turkish fashion designers are becoming so popular. Merve Bayindir herself shares the secret behind their inspirational timeless designs, and how Turkey as a country inspires her work:
“Turkey is a country that is a mosaic of cultures. Each region has its unique identity that is formed through a long history. The most pure form of culture gives a designer an amazing platter of colors and patterns. In order to grow as designer, one must learn and take advantage of his/her background and blend that with today’s concepts. The Turkish design industry is one of the most upcoming and growing industries in the world – the missing elements assumed by others are never the problem, instead they are the road to creative and improved solutions, both for the designers and clients. As a London based millinery designer who originated from Turkey, I have learned how to blend the colours through the timeless cultural fabrics of Turkey, as well as how to manipulate them. You can see touches of my background in every design I make. Also in the details I like to use like handmade lace flowers, which has the essence of Turkey – making everything a bit more special and unique. ”
Revving the engine on the Turkish Economy
Turkey’s automotive production reached an all-time high in 2017, rolling out 1.75m vehicles. This was an increase of 14% compared with 2016, according to a report from the Turkish Automotive Manufacturers Association. Today, Turkey is the fifth-largest automotive production base in Europe and is expected to continue growing. In the early 1990s, rapid industrialisation transformed the sector from assembly-based partnerships to a fully-fledged industrial manufacturing sector with a significant production capacity. Turkey produces vehicles for export and many international manufacturers have made Turkey their base, evidenced by the fact that 77% of production is intended for export markets.
Turkey is becoming an increasingly competitive car manufacturer, as its industries are expanding their technical know-how. Its large and growing young population, and increasingly educated workforce, will continue to provide significant access to medium-skilled labour. Low tax rates and labour costs in comparison with many EU neighbour states make the country an attractive destination for labour-intensive industries. Hourly labour costs, according to figures compiled by Eurostat, average at approximately EUR 6 in Turkey compared with EUR 24 in the European member states.
With an environment well suited for innovation and entrepreneurship, and a young population that is eager to live at the forefront of technology, Turkey boasts a prominent financial technology scene, and is well on its way to becoming the world’s next cashless society. The country is excelling from a business and economic perspective, and has seen the birth of several hot start-ups that are taking on traditional banking methods and revolutionising the payments landscape. Turkey’s goal? To be totally cashless by 2023. The country has ambitious plans for the future and is on track to achieve this, as well as becoming one of the top 10 economies in the world by 2023.
Increasing domestic and foreign investment into Turkey’s financial technology sector, along with a higher than average acceptance of payment cards and tech-savvy population, makes for an economy that is ready to transition to becoming cashless. The question is whether they can achieve this. All signs point to “yes” for a number of reasons.
An international outlook
Leveraging a competitive and highly-skilled workforce combined with a dynamic local market and favourable geographical location, Turkey has proven itself a key player in the global economy – and is investing in an infrastructure worthy of the name.
Istanbul New Airport, the world’s largest airport, will open its gates in October, serving flights to more than 300 destinations with an initial capacity of 90 million passengers. Other multi-billion-euro projects to have opened in recent years include a third bridge over the Bosphorus Strait, the expansion of Istanbul’s metro system and the 2.6-kilometre-long Osman Gazi bridge in the gulf of Izmit, named after the fourteenth century founder of the Ottoman dynasty.
Continued investment in Turkey from international corporations, across several industries, reflects growing confidence from international investors – and speaks to the quality of Turkish products. The future is bright for Turkey, and many have yet to discover the potential.
UK might need negative rates if recovery disappoints – BoE’s Vlieghe
By David Milliken and William Schomberg
LONDON (Reuters) – The Bank of England might need to cut interest rates below zero later this year or in 2022 if a recovery in the economy disappoints, especially if there is persistent unemployment, policymaker Gertjan Vlieghe said on Friday.
Vlieghe said he thought the likeliest scenario was that the economy would recover strongly as forecast by the central bank earlier this month, meaning a further loosening of monetary policy would not be needed.
Data published on Friday suggested the economy had stabilised after a new COVID-19 lockdown hit retailers last month, while businesses and consumers are hopeful a fast vaccination campaign will spur a recovery.
Vlieghe said in a speech published by the BoE that there was a risk of lasting job market weakness hurting wages and prices.
“In such a scenario, I judge more monetary stimulus would be appropriate, and I would favour a negative Bank Rate as the tool to implement the stimulus,” he said.
“The time to implement it would be whenever the data, or the balance of risks around it, suggest that the recovery is falling short of fully eliminating economic slack, which might be later this year or into next year,” he added.
Vlieghe’s comments are similar to those of fellow policymaker Michael Saunders, who said on Thursday negative rates could be the BoE’s best tool in future.
Earlier this month the BoE gave British financial institutions six months to get ready for the possible introduction of negative interest rates, though it stressed that no decision had been taken on whether to implement them.
Investors saw the move as reducing the likelihood of the BoE following other central banks and adopting negative rates.
Some senior BoE policymakers, such as Deputy Governor Dave Ramsden, believe that adding to the central bank’s 875 billion pounds ($1.22 trillion) of government bond purchases remains the best way of boosting the economy if needed.
Vlieghe underscored the scale of the hit to Britain’s economy and said it was clear the country was not experiencing a V-shaped recovery, adding it was more like “something between a swoosh-shaped recovery and a W-shaped recovery.”
“I want to emphasise how far we still have to travel in this recovery,” he said, adding that it was “highly uncertain” how much of the pent-up savings amassed by households during the lockdowns would be spent.
By contrast, last week the BoE’s chief economist, Andy Haldane, likened the economy to a “coiled spring.”
Vlieghe also warned against raising interest rates if the economy appeared to be outperforming expectations.
“It is perfectly possible that we have a short period of pent up demand, after which demand eases back again,” he said.
Higher interest rates were unlikely to be appropriate until 2023 or 2024, he said.
($1 = 0.7146 pounds)
(Reporting by David Milliken; Editing by William Schomberg)
UK economy shows signs of stabilisation after new lockdown hit
By William Schomberg and David Milliken
LONDON (Reuters) – Britain’s economy has stabilised after a new COVID-19 lockdown last month hit retailers, and business and consumers are hopeful the vaccination campaign will spur a recovery, data showed on Friday.
The IHS Markit/CIPS flash composite Purchasing Managers’ Index, a survey of businesses, suggested the economy was barely shrinking in the first half of February as companies adjusted to the latest restrictions.
A separate survey of households showed consumers at their most confident since the pandemic began.
Britain’s economy had its biggest slump in 300 years in 2020, when it contracted by 10%, and will shrink by 4% in the first three months of 2021, the Bank of England predicts.
The central bank expects a strong subsequent recovery because of the COVID-19 vaccination programme – though policymaker Gertjan Vlieghe said in a speech on Friday that the BoE could need to cut interest rates below zero later this year if unemployment stayed high.
Prime Minister Boris Johnson is due on Monday to announce the next steps in England’s lockdown but has said any easing of restrictions will be gradual.
Official data for January underscored the impact of the latest lockdown on retailers.
Retail sales volumes slumped by 8.2% from December, a much bigger fall than the 2.5% decrease forecast in a Reuters poll of economists, and the second largest on record.
“The only good thing about the current lockdown is that it’s no way near as bad for the economy as the first one,” Paul Dales, an economist at Capital Economics, said.
The smaller fall in retail sales than last April’s 18% plunge reflected growth in online shopping.
BORROWING SURGE SLOWED IN JANUARY
There was some better news for finance minister Rishi Sunak as he prepares to announce Britain’s next annual budget on March 3.
Though public sector borrowing of 8.8 billion pounds ($12.3 billion) was the first January deficit in a decade, it was much less than the 24.5 billion pounds forecast in a Reuters poll.
That took borrowing since the start of the financial year in April to 270.6 billion pounds, reflecting a surge in spending and tax cuts ordered by Sunak.
The figure does not count losses on government-backed loans which could add 30 billion pounds to the shortfall this year, but the deficit is likely to be smaller than official forecasts, the Institute for Fiscal Studies think tank said.
Sunak is expected to extend a costly wage subsidy programme, at least for the hardest-hit sectors, but he said the time for a reckoning would come.
“It’s right that once our economy begins to recover, we should look to return the public finances to a more sustainable footing and I’ll always be honest with the British people about how we will do this,” he said.
Some economists expect higher taxes sooner rather than later.
“Big tax rises eventually will have to be announced, with 2022 likely to be the worst year, so that they will be far from voters’ minds by the time of the next general election in May 2024,” Samuel Tombs, at Pantheon Macroeconomics, said.
Public debt rose to 2.115 trillion pounds, or 97.9% of gross domestic product – a percentage not seen since the early 1960s.
The PMI survey and a separate measure of manufacturing from the Confederation of British Industry, showing factory orders suffering the smallest hit in a year, gave Sunak some cause for optimism.
IHS Markit’s chief business economist, Chris Williamson, said the improvement in business expectations suggested the economy was “poised for recovery.”
However the PMI survey showed factory output in February grew at its slowest rate in nine months. Many firms reported extra costs and disruption to supply chains from new post-Brexit barriers to trade with the European Union since Jan. 1.
Vlieghe warned against over-interpreting any early signs of growth. “It is perfectly possible that we have a short period of pent up demand, after which demand eases back again,” he said.
“We are experiencing something between a swoosh-shaped recovery and a W-shaped recovery. We are clearly not experiencing a V-shaped recovery.”
($1 = 0.7160 pounds)
(Editing by Angus MacSwan and Timothy Heritage)
Oil extends losses as Texas prepares to ramp up output
By Devika Krishna Kumar
NEW YORK (Reuters) – Oil prices fell for a second day on Friday, retreating further from recent highs as Texas energy companies began preparations to restart oil and gas fields shuttered by freezing weather.
Brent crude futures were down 33 cents, or 0.5%, at $63.60 a barrel by 11:06 a.m. (1606 GMT) U.S. West Texas Intermediate (WTI) crude futures fell 60 cents, or 1%, to $59.92.
This week, both benchmarks had climbed to the highest in more than a year.
“Price pullback thus far appears corrective and is slight within the context of this month’s major upside price acceleration,” said Jim Ritterbusch, president of Ritterbusch and Associates.
Unusually cold weather in Texas and the Plains states curtailed up to 4 million barrels per day (bpd) of crude production and 21 billion cubic feet of natural gas, analysts estimated.
Texas refiners halted about a fifth of the nation’s oil processing amid power outages and severe cold.
Companies were expected to prepare for production restarts on Friday as electric power and water services slowly resume, sources said.
“While much of the selling relates to a gradual resumption of power in the Gulf coast region ahead of a significant temperature warmup, the magnitude of this week’s loss of supply may require further discounting given much uncertainty regarding the extent and possible duration of lost output,” Ritterbusch said.
Oil fell despite a surprise drop in U.S. crude stockpiles in the week to Feb. 12, before the big freeze. Inventories fell by 7.3 million barrels to 461.8 million barrels, their lowest since March, the Energy Information Administration reported on Thursday. [EIA/S]
The United States on Thursday said it was ready to talk to Iran about returning to a 2015 agreement that aimed to prevent Tehran from acquiring nuclear weapons. Still, analysts did not expect near-term reversal of sanctions on Iran that were imposed by the previous U.S. administration.
“This breakthrough increases the probability that we may see Iran returning to the oil market soon, although there is much to be discussed and a new deal will not be a carbon-copy of the 2015 nuclear deal,” said StoneX analyst Kevin Solomon.
(Additional reporting by Ahmad Ghaddar in London and Roslan Khasawneh in Singapore and Sonali Paul in Melbourne; Editing by Jason Neely, David Goodman and David Gregorio)
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