Microsoft word - new120502de- newsletter englisch march 2012

Please find below our latest newsletter covering recent economic and political developments in Turkey. If you know anyone else who would be interested in receiving this free service, please send their email address to [email protected] and we'll add them to our distribution list. Alternatively, please feel free to forward this newsletter to them directly. We welcome your feedback on this Newsletter or any aspect of the services we offer. Please email your thoughts and comments to: [email protected]. Best regards, Your FMConsulting Team
Overview of Monthly Data

TL-Rates
29.02.2012
30.03.2012
Change in %
Stock exchange index
Inflation in %
Monthly inflation
Annual inflation

Growth Rates

Economic Growth Rates (%)
Growth Rates (%)
Annual Inflation's Monthly Development 2011-12 (%)
Turkey’s exports on the upswing
Having climbed to a record US$11bn 156mn in February, the exports of the Turkish economy
continued to rise in March to reach US$13bn 50mn. First quarter exports totalled US$34bn
744mn, 10.5% up from the same period of the previous year. Apparently the negative effects of
the Arab Spring have been overcome, with Turkey’s exports to Libya, Yemen, Bahrain and Egypt
increasing by 658%, 480%, 193%, and 102%, respectively. According to Turkish Exporters’
Association TIM, this development was due to measures implemented by the government with
the aim of curbing inflation, the current account deficit, and imports. Consequently, TIM President
Mehmet Büyükeksi called for affirmative action to the benefit of exporters in order to facilitate
GDP growth despite this development.
March 7 / April 2, 2012
Unexpectedly strong economic growth in 2011: 8.5 per cent
The Turkish Statistical Institute has just announced that the country’s economy has grown by
5.6% in 2011 to a total income of US$772.3bn, with the gross domestic product in constant prices
amounting to TL114bn 874mn, equivalent to a growth rate of 8.5%. This put Turkey in the lead
among European countries and earned it fourth rank globally behind only Qatar (+14.0%), China
(+9.2%), and Argentina (+8.8%). Thus the growth target of 7.5% was significantly surpassed, and
the per-capita income reached 10,444 US-dollars. With a sharp decline to 5.2% already in the
final quarter of 2011, the government’s best-case scenario for 2012 is 4-5% GDP growth.
Forecasts by international organisations, however, vary between just 2.3% (IMF) and 3.2%
(European Commission). A continuous cause for concern is Turkey’s current account deficit,
which contrary to an earlier announcement by Economy Minister Zafer Caglayan did not recede
in the least but rather climbed to US$77bn 157mn, close to 10% of the national income. This is a
stark increase over 2010, when the deficit amounted to US$46bn 653mn, just about 6.4% of a
GDP of then US$731.6bn.
Turkey’s GDP in 2011 compared with 2010 (million TL in constant prices)
Change (%)
Contribution
Difference
(points)
Private consumption
State consumption
Investments (*)
GDP
(*) Aggregate of gross fixed investments and inventory movements in the private and public sector March 13 / April 3, 2012
Middle East developments play havoc with energy forecast
Turkey’s energy imports, having reached a record level of some US$54.1bn in 2011 (40.5% up
from the previous year), were scheduled to drop to US$49.5bn this year. However, due to
continuing political unrest in the Middle East and ongoing tensions between the United States
and Iran, the crude oil price projection of 97 US-dollars per barrel on which the forecast was
based has long become obsolete. With the barrel pricing nearing 140 dollars, the import bill could
well sum up to US$70bn by the end of the year. While the share of energy in total imports had
been 22.46% in 2011, it rose to 26.5% even in the first two months of 2012. Already energy
imports account for 61.8% of Turkey’s foreign trade deficit. Meanwhile the highest energy price
hike in four years came into effect as of April 1st: Natural gas prices were raised by up to 18.72%,
while at the same time the prices for household electricity and commercial electricity increased by
9.57% and 9.26%, respectively.
Development of the oil price and Turkey’s economic performance (million US$)
Crude oil price
Total imports
Foreign trade
GDP growth
(US$/barrel)
March 26 / April 2/5, 2012
New subsidy package raises high expectations
The Turkish government has presented its eagerly-awaited new subsidy package. It consists of
general subsidies – reduced VAT and customs exemptions – as well as regionally graded special
support measures for structurally weak regions; for this purpose, the country has been divided
into 6 zones. In addition to this, large-scale investments and projects of strategic importance are
to receive particular support which also includes low interest rates, partial funding of employers’
contributions to social insurance, and the allocation of building plots for industrial settlement. By
and large, representatives of trade associations from various sectors and regions commented
favourably on the new system. Unfortunately the subsidies do not apply retroactively to
investments made from June 2011 onwards, as initially proclaimed, but only from January 2012.
April 6, 2012
Politics

Vigorous protests against plans to reorganize the education system
The Turkish government’s plans to extend compulsory schooling to 12 years in three stages of 4
years each are meeting with fierce resistance. Political opponents claim that the proposed system
will in practice make it even harder for girls to gain access to higher education. Another point of
criticism is the planned introduction of optional Quran lessons, for fear of further ideologisation in
the interests of the Islam-minded government. Teachers’ unions responded to the proposal with
nationwide protest rallies, against which strong police forces were deployed. The largest
opposition party, social democratic Republican People’s Party (CHP), announced its intent to
challenge the constitutionality of the draft law in court.
March 14/29 / April 5, 2012
Enhanced cooperation agreed with China
With China’s Vice-President Xi Jinping having visited Turkey in February, Prime Minister Recep
Tayyip Erdogan now became the first Turkish head of government in 27 years to travel to Beijing,
in the company of five members of his cabinet. Other places visited by the large delegation
including 320 businesspeople were Urumqi in Xinjiang, where a wind turbine plant was inspected,
and the country’s economic capital, Shanghai. The two countries signed five major agreements in
the areas of energy, transportation, automotive spare parts, telecommunications, and mechanical
engineering. The volume of trade between China and Turkey has more than tripled over the last
seven years, with a continued upward trend. Turkey’s Agency for the Promotion of Trade, Industry
and Investments expects up to US$110bn of Chinese direct investments in the next 5 years.
Amongst other things, China is in an advantageous position as to the construction of nuclear
power plants in Turkey, since it has the capacity to provide its own funding for projects of that size.
On the other hand, Turkish companies are keen on partaking in the boom in the world’s most
populous country, particularly in the construction sector.
April 9/10, 2012
Clampdown on undemocratic military continues
The special prosecutor’s office in Ankara recently ordered 31 more military personnel to be
arrested after their houses had been searched. Following interrogation by a judge, nine former
high-ranking officers, among them retired four-star general Cevik Bir, were remanded in custody.
In the late 1990s, General Bir was the Number 2 of the Turkish Armed Forces and also
responsible for the clandestine “Task Force West” that devised a plan of action against
fundamentalist activities and is said to have illegally registered almost 6 million foes of the system
in the process. He was one of the main initiators of the bloodless “postmodern coup” triggered by
the February 28, 1997 Memorandum which forced the coalition government led by Islamist prime
minister Necmettin Erbakan to resign. Members of the AKP government hurried to announce that
the arrests were by no means to be considered a retaliation campaign, but rather a normal
democratic procedure aimed at doing justice; at the same time, they urged the judiciary to proceed
within the law. April also saw the start of the trial against those responsible for the last military
coup of September 12, 1980, first and foremost its leader, former Chief of Staff General Kenan
Evren, who will soon turn 95.
April 5/13/16, 2012
Other Topics

Record year for wind power ahead
Already 25 new licences for wind energy plants have been issued in the first two months of the
year. If the development is going to progress at this rate, the record of 120 new wind power
licences from the previous year will again be exceeded in 2012. All in all, 234 licences have been
issued in over the last decade, with only six in 2010 and a mere two in 2009. 41 wind power plants
with a combined installed capacity of 1,786 MW are currently operating, and another 188 with a
total of 6,652 MW are under construction. The largest of the present plants with 140.4 MW is
located in Soma (province of Manisa). There are wind energy projects in 49 of Turkey’s 81
provinces, with the regions on the West Coast and in Central Anatolia leading the way. The
national energy strategy is based on the assumption that 20,000 MW of the total usable potential
of 48,000 MW ought to be utilised by 2023.
March 9, 2012
Faber-Castell on expansion course in Turkey
The Turkish shareholding of Germany-based company Faber-Castell AG, the world’s largest
manufacturer of pencils and coloured pencils, continues to write its success story. In order to allow
its business to expand, the company Adel Kalemcilik, which is part of Anadolu Group, is going to
relocate its longstanding production facility from Kartal (Istanbul) to Cayirova (Gebze/Kocaeli). The
company will be investing US$20-25mn into the new site, construction of which should presumably
be completed by the end of 2013. The investment is aimed at boosting both the production
capacity and the workforce by 20-25% each and further expanding its production range. Currently
Adel Kalemcilik manufactures some 200 million writing instruments per year, 170 million of which
are wood-encased pencils and coloured pencils. With a sales turnover of TL136.1mn in 2011 – a
22% increase over 2010 – the Turkish branch ranks second among the international Faber-Castell
companies, behind Brazil and before Germany. The expectation for 2012 is another double-digit
increase in sales, to around TL155-160mn.
March 28, 2012
Brisa plans record investments in the current year
Turkish tyre manufacturer Brisa, a joint venture of Sabanci Holding with Japan’s Bridgestone
Corporation, is planning record investments for 2012. Last year the company had succeeded in
increasing its sales by 37.5%, to TL1bn 340mn, and its net profits even by 126%, to around
TL72mn. While in 2011 US$54mn was invested to increase the production capacity by 5%, total
investments in 2012 are to reach US$117mn, according to Brisa CEO Hakan Bayman. This
amount will be spent to purchase new machinery and technology for the company’s 361,000
square-metre manufacturing site in Izmit. Brisa, which is Turkey’s leading tyre manufacturer and
Number 7 in Europe, currently exports some 35% of its total annual production of over 9 million
tyres, which are sold under the brand name Lassa; in 2011, the export share increased by 47% to
exceed US$170mn.
April 5, 2012
Foreign Market Consulting Ltd. Sti. does not give any guarantee with respect to the correctness of individual
figures and statements.
FOREIGN MARKET CONSULTING Ltd. Sti. is a German-Turkish consulting company. We specialize in providing
competent consultancy services for foreign companies towards opening up to Turkish market, lastingly
consolidating the market position and concluding strategic alliances between foreign and Turkish companies. If you
need further information, please do not hesitate to contact Mr. Peter Heidinger.
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