TR Economy & Updates

[Nilgiri]

Turkish media tend share very selected information.

Dış ticaret rakamları açıklandı

İhracat 2020 yılı ocak-eylül döneminde 111 milyar 948 milyon dolar oldu.

www.milliyet.com.tr

When you look at with the previous year. Imports increased on a greater scale with Exports. Many experts points out that %85 imports are raw material and intermediate goods. So when we raise exports, imports also increase. We really need to reform our industry.

Yes raw material is fine (lot of time totally unavailable within a particular country).....but definitely intermediates should be looked at to address the situation.

This is what is known as "Value addition"....

say compare importing something 90% finished and adding 10% to it (value wise).

as compared to something 10% finished (essentially raw) and adding 90% value to it.

The latter correlates to more earning, more labour, more know-how, productivity and more jobs broadly in some combination depending on the exact nature of the good or service.

The latter will also genuinely carry more productive export value (and it will also naturally reduce the import pressure for intermediates as it can be done competitively within Turkey).

The other extreme is where zero value addition happens within the country and essentially handling logistics only etc...which classifies technically as "re-export"....and is not really anything productive or impactful to the country itself.

Benefit of value addition is not case only with trade, but larger economy too....you want as much value addition as possible. High income countries basically already achieved near their frontier on this.

Developing and mid income countries must prioritise here what is most optimal for them to expand into in any timeframe...what gives most returns for lowest investment (in short term) and what to high-invest into long term with rational approach (for the longer term).

With a great value addition (productivity basically) being developed and made available in a country, imports exceeding exports is actually not even a big issue (this depends on other things) as simply the imports are majority unlocking much more value within the economy (i.e raw materials being imported to produce good products and services within Turkey). Generally this happens in high income developed countries though rather than transition ones which are still coming "online" so to speak...and thus having export led growth (to more developed and/or larger markets than themselves) is generally optimal approach.

 

[Saithan]

Bro, they actually directly border Russia through Kalinigrad oblast (plus Russia’s wealthiest regions St. Pete and Moscow are a few hundred kilometers by road from Poland). Yet still you can take all of the Middle East, Russia and Central Asia and the Caucasus it still won’t make 1/3 of EU markets, economy, importance.

Poland directly borders EUs heartland and some of it’s wealthiest nations plus their infrastructure is connected to them. Belgium, Austria, Switzerland, Netherlands, France etc are closer to Poland than Gaziantep or Sivas are to Istanbul... forget about ME or Russia etc.

The real money, investments and know how to build a great economy can be found only in just 3 economic super regions- Western Europe, North America and East Asia. The rest is hot air.

Just wanted to add that many danish production companies move to Poland because it's cheaper.

However the prices in Poland has been going up, so it's no longer so cheap, which means some production comes back. As salaries goes up the EU countries will start looking for other countries to move their production to.

Advantage of Poland is its location and low salary.

However Turkey should (IMO) focus on getting more high tech brands produced locally. We need to become new epicenter for Supply Chain, and I hope we can use Libya as the gateway to rest of Africa, it's central location makes it very attractive, and having secured EEZ borders with it we can sail without having to pass through greek waters thus avoid harassment.

I honestly do not know if our people are entrepreneurial enough to found companies that take off and become giants e.g. Amazon or Alibaba, but I can just hope. My cousin built up an IT company and ended up selling it to Alcatel.

Turkish game producers develop good games, and end up selling it to foreigners.

Imagine if we had created League of Legends and sold it for 2 mio usd 20 years ago, and looked at what it's worth today ?

I think the government should have more say in how these companies (Gazelle or whatever you call them) are sold off.

Government should support companies with specialists that can help setup the firm, or help establish a solid foundation to grown upon.

We need to limit agriculture export to keep food prices at decent level so ppl look for potential growth in agriculture.

 

[Saithan]

More global tech firms expected to unveil Turkey investment plans, official says

More and more global technology companies are planning to invest in Turkey, which recently secured nearly $50 million (TL 373 million) investment from...

www.dailysabah.com

 

[Turko]

The FTA deal with UK is only maintaining the status quo we had with the EU Custom Union, now that the UK is officially leaving. Its not expanding anything, but maybe in the future as implied in the media.

Exports growing is nice and all, but first step should be to balance exports and imports. We should compare to similar countries. Mexico is almost exporting 500bln in goods and services. We are late to the exporting game and have a lot of catching up to do. Biggest pain in the ass is our net import of oil and gas. Which is not as much of a problem, as other resource poor countries such as Germany show.

More high value exports in goods and services and more renewables to tackle the current account deficit.

Even agriculture as mentioned could play a role here, but our argriculture is still stuck in the last century. We need more efficiency and more output. Learn from the best such as the Netherlands or Spain.

A country with the advantages of Turkey should be able to produce more than enough food for itself (currently we are not) and export billions € of fresh produce. We have enough sun to run the entire country, but we are still importing oil and gas.

FreeTrade Deal doesn't mean Trade without tax and custom fees. It just removed quotas and limitations. There will be taxes under FTA.

 

[the]

Just wanted to add that many danish production companies move to Poland because it's cheaper.

However the prices in Poland has been going up, so it's no longer so cheap, which means some production comes back. As salaries goes up the EU countries will start looking for other countries to move their production to.

Advantage of Poland is its location and low salary.

However Turkey should (IMO) focus on getting more high tech brands produced locally. We need to become new epicenter for Supply Chain, and I hope we can use Libya as the gateway to rest of Africa, it's central location makes it very attractive, and having secured EEZ borders with it we can sail without having to pass through greek waters thus avoid harassment.

I honestly do not know if our people are entrepreneurial enough to found companies that take off and become giants e.g. Amazon or Alibaba, but I can just hope. My cousin built up an IT company and ended up selling it to Alcatel.

Turkish game producers develop good games, and end up selling it to foreigners.

Imagine if we had created League of Legends and sold it for 2 mio usd 20 years ago, and looked at what it's worth today ?

I think the government should have more say in how these companies (Gazelle or whatever you call them) are sold off.

Government should support companies with specialists that can help setup the firm, or help establish a solid foundation to grown upon.

We need to limit agriculture export to keep food prices at decent level so ppl look for potential growth in agriculture.

What would a Turkish giant specialise in? E-commerce and fintech are already saturated markets, and the largest export is cars/automobile parts - but this market has been disrupted by Tesla and other innovative start ups.

 

[what]

What would a Turkish giant specialise in? E-commerce and fintech are already saturated markets, and the largest export is cars/automobile parts - but this market has been disrupted by Tesla and other innovative start ups.

Do you know how many people in Turkey do not have a bank account but a smartphone? Millions, double digits.
E-Commerce is lagging way behind in Turkey and many other countries. And there are always worse countries so expand into Central Asia, Middle East, North Africa.

 

[Bogeyman]

Ruhsar Pekcan @pekcan6

Türkiye - İngiltere Serbest Ticaret Anlaşması İmza Töreni

www.pscp.tv

Turkey - British Free Trade Agreement Signing Ceremony

https://twitter.com/i/web/status/1343908114098225152

 

[Combat-Master]

https://twitter.com/i/web/status/1343947901878362112

Ruhsar Pekcan @pekcan6

Türkiye - İngiltere Serbest Ticaret Anlaşması İmza Töreni

www.pscp.tv

Turkey - British Free Trade Agreement Signing Ceremony

https://twitter.com/i/web/status/1343908114098225152

 

[Zafer]

https://twitter.com/i/web/status/1343474975869702145

Looking good.

 

[Indos]

Guys, can any one of you here explain to me of why Turkey inflation rate is so high, around 15 % (2019). What is the reason behind it ??

The central bank just try to use traditional way to curb that by tightening monetary policy (raising interest rate) in order to decrease Lira circulation in the real sector. I just want to know the reason behind that high inflation ? The high inflation + large trade deficit make Lira crush.

 

[Tsenal]

Guys, can any one of you here explain to me of why Turkey inflation rate is so high, around 15 % (2019). What is the reason behind it ??

The central bank just try to use traditional way to curb that by tightening monetary policy (raising interest rate) in order to decrease Lira circulation in the real sector. I just want to know the reason behind that high inflation ? The high inflation + large trade deficit make Lira crush.

International markets need strong political presence which Turkey lacks.

If we look at the big picture, I think the biggest issue is a political one. The government fails to project the image of a secure market place. I largely support the latest foreign policy moves the government makes in respect to Turkey's role in the region but with such a confrontational approach one needs allies in the region.

If the government were take a more pragmatic approach instead of an ideological one, we would have more allies (israel, egypt etc.) which would strengthen our hand and project a stronger political stability.

The relationship and the recent trade agreement between Turkey and the UK is a good example of this. Since the UK left the EU, they have been looking to strengthen their relations with the countries in the region and since the UK and Turkey has no overlapping interests in the region, we are able to enjoy good relations with them which will help to maintain investment from the UK.

We fail to strike a similar balance with the EU (Germany and France) due to a failure of diplomacy.

 

[mulj]

International markets need strong political presence which Turkey lacks.

If we look at the big picture, I think the biggest issue is a political one. The government fails to project the image of a secure market place. I largely support the latest foreign policy moves the government makes in respect to Turkey's role in the region but with such a confrontational approach one needs allies in the region.

If the government were take a more pragmatic approach instead of an ideological one, we would have more allies (israel, egypt etc.) which would strengthen our hand and project a stronger political stability.

The relationship and the recent trade agreement between Turkey and the UK is a good example of this. Since the UK left the EU, they have been looking to strengthen their relations with the countries in the region and since the UK and Turkey has no overlapping interests in the region, we are able to enjoy good relations with them which will help to maintain investment from the UK.

We fail to strike a similar balance with the EU (Germany and France) due to a failure of diplomacy.

I disagree amd think that you forgtot possibility or fact that egypt and israel have divergent interests opposite to turkey or even if they don't their stronger allies have who will influence them to oppose turkey, by my opionion that is over simplication of given circumtences and expecting wonders from diplomacy disregarding those facts

 

[Zafer]

International markets need strong political presence which Turkey lacks.

If we look at the big picture, I think the biggest issue is a political one. The government fails to project the image of a secure market place. I largely support the latest foreign policy moves the government makes in respect to Turkey's role in the region but with such a confrontational approach one needs allies in the region.

If the government were take a more pragmatic approach instead of an ideological one, we would have more allies (israel, egypt etc.) which would strengthen our hand and project a stronger political stability.

The relationship and the recent trade agreement between Turkey and the UK is a good example of this. Since the UK left the EU, they have been looking to strengthen their relations with the countries in the region and since the UK and Turkey has no overlapping interests in the region, we are able to enjoy good relations with them which will help to maintain investment from the UK.

We fail to strike a similar balance with the EU (Germany and France) due to a failure of diplomacy.

There is no failure of diplomacy. You can't both make a big presence and still not offend anyone.

 

[Indos]

International markets need strong political presence which Turkey lacks.

If we look at the big picture, I think the biggest issue is a political one. The government fails to project the image of a secure market place. I largely support the latest foreign policy moves the government makes in respect to Turkey's role in the region but with such a confrontational approach one needs allies in the region.

If the government were take a more pragmatic approach instead of an ideological one, we would have more allies (israel, egypt etc.) which would strengthen our hand and project a stronger political stability.

The relationship and the recent trade agreement between Turkey and the UK is a good example of this. Since the UK left the EU, they have been looking to strengthen their relations with the countries in the region and since the UK and Turkey has no overlapping interests in the region, we are able to enjoy good relations with them which will help to maintain investment from the UK.

We fail to strike a similar balance with the EU (Germany and France) due to a failure of diplomacy.

I think the problem is more structural and the inflation may come from the trade deficit first that Turkey experiences. The political one is just the secondary factor although yes it will make problem worst. I think you are the one who knows about which one come first, currency depreciation or inflation, but I suspect trade deficit is the first impetus that make the Lira fall. The political instability is the one that make the increase sensitivity in the financial market over your trade deficit data. The Lira depreciation then causes inflation due to your large trade deficit.

I know Turkey try to balance its trade deficit and this is why your embassy has special task force to do that special duty, but it cannot be easily fixed if the problem is more structural and is more related to Turkey reduced competitiveness.

It is also due to increase domestic energy demand because of Turkey growing economic activity. As your country doesnt have meaningful oil/gas/coal production so it makes your trade deficit grows inline with your GDP growth. India and Pakistan also suffer the same problem before pandemic happen. After pandemic their trade data become positive due to lower investment and domestic consumption.

China on the other hand despite doesnt have large oil/gas production, they do have huge coal production and they also have large trade surplus due to their economic competitiveness and aggressive export penetration. This is why China doesnt experience the same problem, but their import grows fast as well and has been in second position after USA.

 

[Anmdt]

I think the problem is more structural and the inflation may come from the trade deficit first that Turkey experiences. The political one is just the secondary factor although yes it will make problem worst. I think you are the one who knows about which one come first, currency depreciation or inflation, but I suspect trade deficit is the first impetus that make the Lira fall. The political instability is the one that make the increase sensitivity in the financial market over your trade deficit data. The Lira depreciation then causes inflation due to your large trade deficit.

I know Turkey try to balance its trade deficit and this is why your embassy has special task force to do that special duty, but it cannot be easily fixed if the problem is more structural and is more related to Turkey reduced competitiveness.

It is also due to increase domestic energy demand because of Turkey growing economic activity. As your country doesnt have meaningful oil/gas/coal production so it makes your trade deficit grows inline with your GDP growth. India and Pakistan also suffer the same problem before pandemic happen. After pandemic their trade data become positive due to lower investment and domestic consumption.

China on the other hand despite doesnt have large oil/gas production, they do have huge coal production and they also have large trade surplus due to their economic competitiveness and aggressive export penetration. This is why China doesnt experience the same problem, but their import grows fast as well and has been in second position after USA.

1st Turkey has no oil or gas, entirely dependent on international market in this regard, thus makes trade deficit impossible to be balanced. Demand is increasing day by day.
2nd Turkey had a rough and bumpy ride in last 5 years, the region has never been stable since 90s as other countries in similar league had quite a smooth ride in terms of regional stability, (PKK, gulf war, iraq war, ASALA, invasion of iraq, arab spring, coup attempt, ISIS)
3rd Turkey hosts 4+ million refugees from Syria, Iraq, Uyghur, Myanmar. Which an amount of money constantly spent on them, the foreign aids are simply nothing compared to what spent on them (health insurance, allowance, also they tend to work in unqualified jobs ,unregistered,increasing unemployment) For the money spent on refugees, the pressure on lira could have been relieved.
4th Turkey does not compromise from military spending due to economic conditions. Even at the worst times the money has been spent.
5th Previous minister of economy has mismanaged everything.
5th Vol-II, government has done excessive and luxury spending on unnecessary things, still does.

Could it be better?Yes. Could it be a lot better if well managed? I don't think so.

 

[Constan]

https://twitter.com/i/web/status/1344953900831535104

Happy new year !!

 

[Saithan]

https://twitter.com/i/web/status/1344959295490764804

Why lowering import tax on consoles from 50% to 20% ?

 

[Saithan]

Treasury to repay $21.35 bln debt in January-March - Latest News

The Turkish Treasury will repay debts worth 158.7 billion Turkish liras ($21.35 billion) in the next three months, the Treasury and Finance Ministry announced on Dec. 31.

www.hurriyetdailynews.com

 

[Nilgiri]

I think the problem is more structural and the inflation may come from the trade deficit first that Turkey experiences.

India and Pakistan also suffer the same problem before pandemic happen.

tbh Pakistan's problems are on whole different level to either India or Turkey (and by quite a huge margin too).

Pakistan literally saves only 7% of GDP per year, exports about the same and imports 3 times this per year...at a low development level too...

I say this because savings (given it is the fundamental number for investment rate and capital formation) is only way for breakout for developing countries.

You have to strain and look really hard to find other countries in that situation (importing multiple times of savings), and even then they often have mitigating circumstances/factors that help them compared to abject hole Pakistan has dug for itself over last 30 years especially.

It is pretty sad how much at PDF they dont understand this fundamental issue and (except a few) dance well around this focusing on all other things and whatever monthly brochures that look good. Anyway long story.

Also equating trade deficit to inflation needs to look at what exactly the import vs export structure is rather than just level.

Turkey case is quite unique here as to what is driving the depreciation of Lira vis a vis import and export elasticities (energy is just one part) and other forex elasticities relative to its biggest A, B and C regarding foreign currencies and foreign know-how etc:

A) Investors (Hard capital and more liquid capital)
B) Loan and bond providers (Long, mid, short)
C) Trade + remittance partners (Goods, services, labour quality and quantity)

...and factoring "Quality" for each one. Erdogan admin has especially let A and B slip w.r.t that.
It would take at least a days work to produce a sound enough detail on this stuff with a layman explanation for it.

BTW, Elasticities you can think of heart conditioning for a body, how responsive is it to an external exercise/rest etc.

Inelastic means its kind of non-responsive stuck in one mode (needs this much or provides this much no matter the price on market).

For forex stability (and body health) you need as much elasticity as possible (for example if price of something increases, people lower demand for it easily as they have other alternatives or its frivolous etc).

Just like you preferably want your heart to be able to pump well at a wide range (elastic arteries etc) and have good resting heart rate etc.

This is why like you have, energy is notable one to bring up as its highly inelastic good (society has kind of fixed demand for it in a snapshot, no matter the snapshot price), mostly because its a huge base input for any economy with lot of capacity lag involved too (given the economy of scale involved).

i.e if oil price doubles, demand definitely does not halve (say to keep total spending same), it may drop 10% etc. This is precisely why OPEC (essentially a cartel) formed knowing this.

People/country are thus forced to cough up more (with oil/energy price increase) because its such a base input to everything (transport, heating etc) with very little alternative/competition on those fronts.

Energy is very much like carbs for body too...you need certain amount regardless...but imagine what you to do your heart health if you eat only sugar. That is similar to why its bad to be too easy-energy dependent or reliant. Extends to primary goods in general.

 

[Saithan]

Turkey pledges to take ‘decisive stance’ in fight against inflation

Turkey’s consumer prices edged higher than expected in December as food costs jumped, official data showed Monday, while the treasury and finance...

www.dailysabah.com