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 Economy

Overview of monthly data

Foreign trade figures

The law reducing corporate tax to 20% was finally passed
The law promised by Erdogan at the New Year’s Eve for the reduction of corporate tax from 30% to 20% starting from 2006 was finally passed in the Turkish parliament and will be applied retrospectively from 1.1.2006.

Economic growth in Turkey in the first quarter again exceeded expectations with 6.3%, the highest increase was recorded again by the construction sector with 25.9%
According to information from the Statistics Institute TÜIK the real increase in GNP in the first quarter of this year was 6.3%, the real increase in GDP was 6.4%. The experts in fact admitted that these values were over the expected 5-6% however will expectedly slow down in the second quarter. The money of the population was mainly spent in the first quarter for real estate and durable consumption goods. The result is that again the construction sector recorded the highest sector growth with 25.9%.

(Dünya, 1.7.2006)

Zero tax for foreigners
When the fluctuations in markets could not be stopped despite interest rate increase and intervention in foreign currency the government could only solve the problem by taking fiscal measures. In order to prevent hot money outflow, the 15% stoppage applied on the gains and income obtained by foreigners from financial instruments has been zeroed. 10% stoppage will be applied to locals.  The existing stoppage rates will be applied until the amendments disclosed by the Minister of Finance Kemal Unakıtan and Minister of State Ali Babacan come into force. The 15% stoppage collected until now will not be refunded. The draft relating to the arrangement has been prepared as a legislative proposal and was rapidly included in the agenda of the Planning and Budget Commission. (Dünya 23.06.2006)

The fewest Part-Time jobs are in Turkey
Where the governments in many countries promote part-time jobs to lower the unemployment rate, according to the figures of OECD Turkey is the country with the lowest number of part-time jobs among member countries. Turkey ranks at the bottom with 7% with respect to the ratio of part-time workers to total work force. This ratio is 36% in Holland, 28% in Australia, 27% in Japan and 21% in Norway. The other countries with a low number of part-time workers are Greece, Portugal and Finland, respectively. (Dünya 26.06.2006) 

Permanent foreigners liked it in Turkey
Despite an exit movement in short-term capital called hot money there is a reverse process in mid- and long-term permanent foreign capital. While 5588 foreign capital firms entered Turkey between the years 1954-2002, 2003, this number was 7140 in the period covering 2004, 2005 and January-April of 2006. The foreign capital firms operating in Turkey predominantly prefer wholesale and retail trade, followed by manufacturing industry, real estate leasing and business activities as the other most preferred sectors. (Dünya 26.06.2006)

DPT will issue the individual typology of 81 provinces
DPT has started preparations for issuing the typology of 81 provinces. Provinces will be grouped with this study and it will be determined in which province agriculture, industry or natural resources will be focused on. In this classification, apart from the grouping of metropolitan cities including provinces such as Ankara, Istanbul , İzmir, the provinces Denizli, Gaziantep and Kayseri , called the Anatolian Lions, will establish another group. (Dünya 27.06.2006)

The determined attitude of the Central Bank subdued the market turmoil
The decisions taken by the Chairman of the Central Bank towards subduing the turmoil in the US Dollar started to show its effects at the end of June. By selling 1.5 billion dollars in total to the markets in the last week of June, the exchange rate of dollar, once 1.77, was again lowered below 1.6 YTL. (Dünya 28.06.2006)  

YASED: We are expecting 12 billion dollars of foreign capital in 2006
YASED Chairman Saban Erdikler stated that foreign investors trust in the Turkish economy and said, “Direct foreign capital inflow will continue at the same pace. I am expecting 12 billion dollars at the end of this year”. Erdikler drew attention to the fact that in the first 5 months of this year, together with the privatizations, 7.5 billion dollars of direct foreign capital inflow was realized. Stating that the executives of 20 multinational companies representing 11 countries and 20 different sectors will participate in Investment Counseling Meeting, Erdikler said Prime Minister Erdogan will hold a round table meeting with foreign investors. (Dünya 28.06.2006)

Turkey is going through a test
Stating that the Turkish economy is going through a test, the Minister of State Ali Babacan said, “In open economies capital inflow as well as capital outflow are normal day events. However, capital coming to Turkey will always exceed the capital leaving it”. Commenting that 2007 will be an election year Babacan said they won’t be engaged in election economics or compromise  budgetary policies and fiscal discipline. Minister Babacan, speaking at a meeting of Turkish Banks Association and International Finance Institute in a period when the fluctuations in markets are deeply felt in various segments of the economy from finance to indusrial sector, tried to boost the confidence of the markets. Babacan stated there is also no loosening of control with respect to EU. (Dünya 29.06.2006)

Unemployment went down to 10.9% in March
Due to season reasons the unemployment rate went down to 10.9% as of March., having been 11.9% in February. According to the Household Work Force Survey conducted by the Statistics Institute of Turkey, the participation rate to work force was 46.5% and non-registered employment decreased by 2.8 points and reached to 46.8%.  (Dünya 21.06.2006) 

(Dünya, 21.6.2006)

Politics

Invitation for a diplomatic solution from Gül to Iran on nuclear issues
The Minister of Foreign Affairs Abdullah Gül, visiting Iran to convey the message of Prime Minister Erdogan, said the solution of Iran’s nuclear issues via diplomatic means will be in favor of Iran in the first place, then Turkey, the region and the world in general. At a meeting with the Minister of Foreign Affairs Manucehr Mutteki in Iran’s capital Tehran, Abdullah Gül emphasized that after overcoming the nuclear crisis a new era will start in the region aimed at economic development. (Dünya 26.06.2006)

Turkey is the fastest growing market in Europe
The Guardian newspaper published in England described Turkey as the fastest growing market in Europe and stated European Union’s non-admission of this country as a member will pose a great threat. The Guardian newspaper remarks that many European Union member countries think they could not absorb such a big country. It stated that they published a Turkey Supplement to prove that those fears are in vain. Olli Rehn, Commissioner of EU Commission in charge of Expansion in his statement in this Turkey supplement stated that Europe has to stick to its commitments to have an honest line in relations with Turkey. (Dünya 27.06.2006)

Negotiations may come to a halt because of Cyprus issue
Olli Rehn, Commissioner of EU Commission in charge of Expansion stated that the accession negotiations with Turkey may come to a halt because of Cyprus issue. Rehn said in case the obligations are not fulfilled the negotiations may be suspended. Rehn signaled a solution should be found with respect to the additional protocol by the end of the summer otherwise a crisis may occur in October or November. As a reply to Rehn, Prime Minister Erdogan said “I can assure him that everything requested from us will be realized”. (Dünya 30.06.2006)

Further Topics

“denim” boost for confection exports
“Denim” exports where Turkey has left its mark in recent years reached a level of 1.4 billion dollars in 2005. Board Member of Istanbul Ready Wear and Confection Exporters Union, Ahmet Akbalik stated that the share of denim trousers was 9% in 1999 and Turkey ’s total woven confection exports increased to 28% in 2005. (Dünya 23.06.2006)

Turkey’s denim trousers exports broken down in to years:

(Dünya, 23.6.2006)

Dogan-Pakdemirli agreed on bio diesel
Aydin Dogan and Ekrem Pakdemirli, a former Minister, established a partnership to produce bio diesel. Pakdemirli has a 10% share in Çevresel Kimya, where the holding chaired by Aydin Dogan has a 90% share. Ekrem Pakdemirli, announcing that they will start with bio diesel production in Bandırma in July, said they will  plant kanola, the raw material of bio diesel, on an area of 1 million hectares with 100 thousand tones production capacity. (Dünya 28.06.2006)

The biggest IT company of Turkey is Telekom
The results of the comprehensive study “Informatics 500” reflecting the Turkish informatics market have been announced to the public. According to the study the first three ranks were occupied by Telekom, Turkcell and Telsim (Vodafone). They were followed by KVK Teknoloji, Genpa, Avea, Netcell, Indeks Bilgisayar, A-tel Pazarlama, Hewlett-Packard.  (Dünya 28.06.2006)