March 2024

Economic & business news from Türkiye

Fitch Ratings raises its rating to B+

The international rating agency Fitch Ratings raised Turkey's credit rating from “B” to “B+” with an outlook changed from “stable” to “positive”. This is the second improvement in several months, the agency having raised the country's outlook from “negative” to “stable” last September.

Inflation expectations as well as external liquidity risks have eased, as evidenced by more favorable external financing conditions, higher reserves, a reduction in foreign exchange protected deposits and a reduction in the current account deficit. Indeed, Turkey's foreign exchange reserves have increased by 32 billion USD since last June, reaching 131 billion USD and the agency estimates that they should reach 148 billion USD at the end of 2024 and 159 billion USD. end of 2025. Average inflation in 2024 is expected to be 58% and could reach 29% in 2025 thanks to credit and strict monetary policies.

This improvement results from greater confidence in the sustainability and effectiveness of the economic policies implemented, notably the earlier-than-expected tightening of monetary policy aimed at reducing macroeconomic and external vulnerabilities.

Source: Fitch Ratings, March 8, 2024

Turkish Kaan fighter's first successful flight

The Kaan fighter jet successfully completed its first test flight from Murted Airport in the capital Ankara with pilot Barbaros Demirbas at the controls, during which it reached the altitude of 8,000 feet and the speed 230 knots

Launched in 2010, the TF-X program (now called "Kaan") aims to develop a so-called 5th generation combat aircraft in order to replace the F-16C/D of the Turkish air force and to ensure that Turkey can strengthen its arms industry. Nine years later, and after having established a partnership with the British BAE Systems and Rolls Royce in order to carry out its development, Turkish Aerospace took advantage of the 2019 edition of the Paris Air Show to unveil a scale model of the TF-X/Kaan. At the time, the Turkish manufacturer specified that this aircraft would be an air superiority aircraft equipped with an active antenna radar (AESA), capable of flying at a speed of Mach 2, at an altitude of 55,000 feet. [17,000 meters].

With this inaugural flight, the Communications Directorate of the Turkish Presidency announced that with the Kaan aircraft, Turkey will be one of the five countries in the world that can produce 5th generation aircraft.

Source: Military Zone, February 21, 2024

Istanbul Airport awarded for the 4th time

Istanbul Airport received the “Airport of the Year” award from Air Transport News for the 4th time in a row.

According to the CEO of Air Transport News, Istanbul Airport has proven to be a strategic aviation hub at the forefront of innovation despite the challenges facing the industry since the pandemic. The airport quickly reached pre-pandemic passenger numbers and increased airline diversity to become a leading global hub.

For airport CEO Selahattin Bilgen: “Standing out among all international airports in the world and obtaining this title once again demonstrates the dedication of all airport teams who aim for operational excellence.”

In order to offer passengers a pleasant travel experience, the airport sets high standards in terms of efficiency, sustainability, innovation and passenger satisfaction.

Air Transport News is a key online source for the airline industry providing access to aviation news, expert analysis and interviews with industry executives.

Source: Daily Sabah, March 18, 2024

Flying Tiger Copenhagen sets up in Türkiye

The Flying Tiger Copenhagen chain enters the Turkish market in collaboration with the Turkish Karaca Group. The two companies have entered into an international franchise agreement regarding the exclusive rights of the Karaca Group to develop and operate the Flying Tiger Copenhagen franchise concept in Turkey.

Flying Tiger Copenhagen is a Danish chain that offers a variety of items ranging from decoration, games and toys, stationery to kitchen utensils and bathroom accessories at attractive prices.

The first store will open its doors next fall in Istanbul and will offer more than 4,000 references. The Danish group plans to expand rapidly in the territory by planning the opening of 10 additional stores in the following two months. The group's objective is to establish 100 stores within 5 years and reach a turnover of 120 million EUR. The products will also be offered online as soon as the first store opens.

Karaca Group is a large Turkish distribution group specializing in household items (textiles, tableware, decoration, small household appliances, etc.) which has nearly 3,500 employees, 14 brands, 305 stores and more than 2,000 points of sale in 43 countries.

Source: Ekonomist, March 6, 2024

6G network: partnership between Turk Telekom and Nokia

Turkish giant Türk Telekom has signed a goodwill agreement (MoU) with Nokia with the aim of developing 6G-based products and services. They will work together to realize industrial applications and develop the ecosystem, as well as share a strategic vision for the transformation of the 6G network and the development and testing of 6G-based products and services. The partnership also includes the development of 5G and 5G-Advanced.

This collaboration aims to accelerate Turkey's digital transformation. Next-generation technologies providing smart solutions in transportation, healthcare, education, agriculture, entertainment and urbanization are of great importance to the country. The duo intends in particular to carry out tests in the areas mentioned.

Turkey's objective today is the deployment of 5G which should be achieved this year. The country is currently using the 4.5G network since 2016.

6G will be the sixth generation of wireless communications technologies succeeding 5G and supporting cellular data networks. It will meet the needs of speed-hungry systems for transporting large quantities of data, in particular intelligent transport systems, interconnected vehicles, or the Internet of Things, for example.

Source: Dünya, February 28, 2024

New USD 100 million data center in Türkiye

Vodafone Türkiye and Emirati company Edgnex Data Centers by DAMAC, one of the world's leading digital infrastructure providers, have joined forces to establish a data center in Izmir with a total investment of USD 100 million. This will be one of Vodafone's highest capacity data centers in the Aegean region, reaching a capacity of up to 6 megawatts. It will be designed so that its capacity can increase up to 12 megawatts.

The data center is expected to become operational in the first quarter of 2025. It will start operations with data transport and hosting services. With this new facility, the number of Vodafone data centers in Turkey will increase to six and its white area area will reach 13,500 m2. The new center, equipped with the latest technologies, will be designed according to Tier 3 standards, which will guarantee a design that meets the highest requirements.

The choice of Izmir for this investment is particularly strategic since the city is located close to numerous submarine cable transit stations providing access to Europe, Africa and Asia. Ongoing submarine cable development work in the region is becoming attractive to Internet exchanges and content delivery network (CDN) providers.

Source: Anadolu Agency, February 19, 2024

Automotive: validation of the investment of 1.4 billion EUR

The Competition Council has decided to grant an exemption to the agreements between Ford Motor Company and Volkswagen AG on the development, production and supply of one-ton commercial vehicles.

Under the agreement, the first vehicles produced at Ford Automotive's Kocaeli facility will be next-generation one-ton medium commercial diesel variants, plug-in hybrid electric variants and fully electric variants.

Ford is expected to invest EUR 1.390 billion between 2020 and 2025 and increase its production capacity for one-tonne utility vehicles from 180,000 to 405,000.

With this approval, the Competition Authority confirms its positive approach to collaborations that contribute to growth and employment and supports efforts to make Turkey an international and regional production center in the automotive industry. The Parties will achieve economies of scale and cost savings through the use of common technologies and components, as well as contributions to investment, employment and production technology in Turkey.

Source: Daily Sabah, February 21, 2024

Photovoltaics: investment of 50 million USD in Türkiye

The Turkish subsidiary of the Chinese firm, HT Solar Energy, will invest USD 50 million in the construction of a new photovoltaic cell production plant with a capacity of 2 GW. The new investment is expected to be completed by the end of 2024.

Established in Turkey since 2016 in the Tuzla free zone, HT Solar Energy currently has a photovoltaic cell production plant with an annual capacity of 1 GW.

Since entering the Turkish market, the company has supplied approximately 2 GW of solar panels to the Turkish market and approximately 8 GW worldwide. The United States is its leading export market, followed by Europe and the Middle East. Today, one in five solar panels installed in Turkey bears the HT-SAAE brand, representing around 20% of the country's solar energy demand.

The Marketing and Sales Director of the Turkish subsidiary underlines the strategic importance of this investment decision which aims to produce this cellular technology in Turkey to cope, among other things, with the new customs barriers that the United States should impose on other countries. Asian countries, in addition to China.

Source: Dünya, March 21, 2024

Wind energy: investment of 1 billion EUR

Spanish-German multinational Nordex Group plans to expand its participation in wind energy in Turkey by announcing a significant investment of EUR 1 billion. The group plans to add 1 GW of wind power capacity to its existing capacity of 3.5 GW.

According to the group's CEO “Turkey has stood out in supply chains and equipment production following supply constraints due to the COVID-19 outbreak and will be able to provide a network alternative supply to that of Asia.” Adding “Its [Turkey’s] ability to adapt to global trends is also an asset for investors.”

Turkey has seen significant progress in its local production of wind power equipment, supported by a regulatory framework and incentives. More investment options have been made available to investors thanks to renewable energy legislation.

The Nordex Group is a market leader in wind energy in Turkey, where it produces half of the wind power towers Europe needs.

The country produced wind power equipment worth EUR 700 million last year, the majority of which was exported to Europe.

Source: Anadolu Agency, March 21, 2024