After two new candidates managed to collect over 100, 000 signatures it was revealed that a total of four candidates will officially run in Turkey’s 2023 presidential elections. In a new move before the May 14 elections, Turkish President Recep Tayyip Erdogan has announced that the minimum wage will rise in July for a second time this year and the electricity prices will be lowered by 15 percent for all users, and gas prices by 25 percent for industrial consumption in April. The State Oil Company of Azerbaijan (SOCAR) has started transiting Kazakhstani oil via the Baku-Tbilisi-Ceyhan (BTC) pipeline. Prime Minister of Armenia Nikol Pashinyan participated on March 29 in the official opening of the Summit for Democracy 2023 held at the initiative of United States President Joe Biden. Neither Turkey nor Azerbaijan were invited to Biden’s Democracy Summit. Russian agricultural watchdog Rosselkhoznadzor has asked Armenia to suspend exports of dairy products. Armenian Minister of Economy Vahan Kerobyan denied any political context behind the decision.
Below are the main economic and business developments in Georgia’s neighboring Turkey, Azerbaijan and Armenia.
Turkey
Turkey's trade deficit expanded by 51.4% from a year earlier to $12.1 billion in February, according to official data of the Turkish Statistical Institute (TurkStat). The country's exports fell 6.4% year-on-year to $18.6 billion in January, while imports increased 10.1% to $30.7 billion. The exports-to-imports coverage ratio decreased to 60.7% this February, versus 71.4% in February 2022. Excluding energy products and non-monetary gold, Turkey saw a foreign trade deficit of $2.5 billion last month. Country's largest outbound shipments were to Germany with a worth of $1.7 billion. It was followed by Italy with $1.12 billion, the US $1.09 billion, Russia $1.01 billion, and the UK $851 million. On the other side of the ledger, the largest amount of outbound shipments were made from Russia with $4.2 billion, followed by Switzerland $3.5 billion, China $3.1 billion, Germany $2.08 billion, and Italy $1.16 billion.
Net profit of Turkish banks reached 65.6 billion Turkish liras ($3.48 billion) in February, nearly double in lira terms compared to last year, the country’s banking watchdog said. Total assets of the lenders totaled at 15 trillion liras ($797.5 billion) in February, rising from 9.5 trillion liras ($687.4 billion) in the same month last year, the Banking Regulation and Supervision Agency data showed. Loans, the largest sub-category of assets, amounted to 8.1 trillion Turkish liras ($427.3 billion) last month. On the liabilities side, deposits held at lenders in Türkiye – the largest liabilities item – came in at 9.4 trillion Turkish liras ($500.7 billion). The sector’s regulatory capital-to-risk-weighted-assets ratio – the higher the better – stood at 17.15% at the end of February. The ratio of non-performing loans to total cash loans – the lower the better – was 1.93%. As of end-February, a total of 54 state/private/foreign lenders – including deposit banks, participation banks, and development and investment banks – were operating in Turkey. The sector had 209,208 employees working at 1,156 branches both in Türkiye and abroad, along with a total of 48,858 ATMs.
Turkey’s gross external debt stock totaled $459.03 billion at the end of 2022, the Treasury and Finance Ministry said. The gross debt was up from $439.26 billion at the end of 2021 while the debt-to-GDP ratio decreased from 54.4% to 50.7%. The country's net foreign debt totaled $235.28 billion as of Dec. 31, accounting for 26% of its GDP. The net debt was at $222.48 billion at the end of the previous year while the debt-to-GDP ratio was 27.6%.
Turkey’s first indigenous electric vehicle brand Togg has received 177,467 pre-orders for its first model T10X in the past 12 days. The pre-order phase began on March 16 and ended on Monday. The firm will deliver 20,000 T10X this year, and a draw will be held on Wednesday to determine those who will receive 20,000 T10X electric cars. Previously, the firm announced that the number of deliveries in 2023 will be at 12,000 but after the high demand the firm raised the figure to 20,000. The price of the standard range model T10X is starting from 953,000 Turkish liras (about $50,200) to 1.055 million liras (about $55,600), while the long-range model was priced at 1.215 million liras (about $64,000).
Last week Turkish media reported that four candidates will officially run in Turkey’s 2023 presidential elections. Homeland Party leader Muharrem İnce and far-right ATA Alliance’s candidate Sinan Ogan have joined the list of politicians running in the presidential race as they were able to collect more than 100,000 signatures, a requirement to be a candidate for parties that have no group in the parliament.
The list was finalized on March 27. Therefore, the following four candidates will compete for leading Turkey: Recep Tayyip Erdoğan, incumbent President of Turkey (2014-present), leader of the Justice and Development Party (AKP); Kemal Kılıçdaroğlu, leader of Republican People's Party, leader of the opposition; Muharrem İnce, leader of the Homeland Party, candidate for president in 2018; Sinan Oğan, former member of the parliament from MHP (2011–2015) (running as Independent).
On March 29, Turkish President Recep Tayyip Erdogan announced that the minimum wage will rise in July for a second time this year. When asked if there will be a hike in minimum wage, Erdoğan said “it will happen in July” after the AKP’s parliamentary group meeting. Turkey hiked the minimum wage by some 54.66% to 8,506 lira ($444) in the first month of 2023. In July 2022, minimum wage rose by 30 percent for a second time in 2022 in the face of high inflation. During the AKP’s parliamentary group meeting, Erdoğan also announced that the electricity prices will be lowered by 15 percent for all users, and gas prices by 25 percent for industrial consumption in April.
Some 1,178 firms closed down in February, marking a 52.4 percent increase compared to the same month of last year. The figures were revealed by the Union of Chambers and Commodity Exchanges of Turkey (TOBB). Also, the number of shut down cooperatives and one-person companies saw a decrease in February compared to the same month of last year, occurring at a level of 42.4 percent and 20.4 percent respectively.The TOBB report also gave figures of the newly founded firms, saying that 9,473 new firms were established in February, showing a 33.5 percent decrease compared to the previous month and a 3.8 percent decrease compared to February 2022.
Azerbaijan
The State Oil Company of Azerbaijan (SOCAR) has started transiting Kazakhstani oil via the Baku-Tbilisi-Ceyhan (BTC) pipeline. According to the company, the first batch of Kazakhstani oil produced at the Tengiz field was delivered on March 23 by the President Heydar Aliyev tanker from the port of Aktau to the Sangachal terminal of Azerbaijan. Transportation of Kazakhstani oil via the BTC is carried out under an agreement between SOCAR and Kazmunaigas, which envisages the transit of 1.5 million tons of oil per year.
As of March 1, 2023, the assets of Azerbaijan-based banks amounted to over 45,708.6 million manats (over $26.9 billion), up 18.8% from a year earlier. The loans issued to customers amounted to 18,562.6 million manats (more than $10.9 billion). Year-on-year, the loan portfolio grew 16.2%, and the share of loans in assets dropped from 41.5% to 40.6%. In the reporting period, the liabilities grew by 19.6% to 39,972.5 million manats ($23.5 billion), with the deposit portfolio rising by 20.35% to 32,560.8 million manats ($19.2 billion). Individuals accounted for about 11,653.9 million manats ($6.9 billion), while legal entities made up 20,906.9 million manats ($12.3 billion). During the year, the funds of the population in banks increased by 18.1%, and the funds of companies in banks increased by 21.65%. The liabilities of the banks to the Central Bank of Azerbaijan (CBA) dropped by 32.3% to 214.7 million manats ($126.3 million), and net worth surged by 13.3% to roughly 5,736.1 million manats ($3.4 billion).
As of March 1, 2023, the overdue loans in Azerbaijan stood at 606.1 million manats ($356.5 million), up 3.8% from the previous month. According to the Central Bank of Azerbaijan, this figure is 2.1% more than early 2023, and 12.2% less than a year earlier.
Azerbaijan's banking sector made a net profit of 155.7 million manats ($91.59 million) in January-February of this year (+44.6%). During the two months, banks' operating income amounted to 727.5 million manats ($428 million) (+35%), operating expenses to 464.4 million ($273.2 million) manats (+26.1%), allocations to special reserves made up 63.1 million ($37.2 million) manats (+89.5%), and profit tax payments stood at 44.2 million ($26 million) manats (+49.8%).
In February 2023, the annual inflation rate in Azerbaijan totaled 14.1 percent, or 1.5 percent less than the peak level registered last year (15.6 percent in September 2022).
Azerbaijan’s foreign trade turnover decreased by $800m or 10 percent, amounting to $7.1bn in January-February 2023 compared to the same period of 2022.
In January-February of 2023, fuel consumers in Azerbaijan bought gasoline and diesel fuel in the amount of AZN408.7m ($240m). According to the State Statistical Committee, compared to the corresponding months of 2022, the income from the sale of gasoline and diesel fuel to consumers increased by 7.7 percent. During the reporting period, 5 percent of the total volume of retail trade turnover in Azerbaijan was obtained from the sale of automobile gasoline and diesel fuel.
In January-February of 2023, 7.9bn cubic meters of natural gas were transported through main gas pipelines in Azerbaijan, and an increase of 12.7 percent was observed compared to the same months of 2022. According to State Statistical Committee, in two months, 45.8 percent of gas transportation was carried out through the Baku-Tbilisi-Erzurum (South Caucasus Pipeline - SCPK) pipeline, and 3.6bn cubic meters of natural gas were exported through this pipeline.
Armenia
Consumer prices in Armenia in January-February 2023 rose by 8.1% compared to January-February last year, according to the National Statistical Committee (NSC).It said prices grew by 0.1% in 2023 February when compared to January of the same year, and by 8.1% compared to February 2022. The prices of industrial goods in the first two months of 2023 increased by 0.8% compared to the same period of 2022. In February 2023, they were down 0.1% compared to February last year.
Armenia's foreign trade in January-February 2023 amounted to over $2.5 billion, a 77.7% surge over January-February 2022. The foreign trade in February 2023 was up 14.6% compared to January of the same year, and up 79.5% compared to February last year. Armenian exports soared by 96.4% year-on-year to $994.4mln. In February 2023, a 2.1-fold increase was registered compared to February last year. Armenian imports during the reporting period amounted to over $1.5 billion, recording an increase of 67.4% compared to January-February 2022. Imports rose 62.3% year-over-year in February.
Armenia's economic activity recorded 10.9% growth in the first two months of 2023 compared to the same time span of 2022. The economic activity in February was up 6.5% as opposed to the previous month, while compared to February 2022 it was up 11.3%. According to the NSC's figures, all sectors of the economy saw growth in January and February this year, except for electric power industry. No data was available on the agriculture.
Armenian Prime Minister Nikol Pashinyan said that his country continues to be in a state of high economic activeness, continuing that "we have set a task to ensure economic growth of at least 7 percent also in 2023."
Russian agricultural watchdog Rosselkhoznadzor has asked Armenia to suspend exports of dairy products. It said the decision was prompted by the outcome of talks with Armenian officials and the unsatisfactory results of earlier inspection. Rosselkhoznadzor said it asked the Veterinary Service of Armenia to suspend from April 5, 2023 the certification of dairy products exported to Russia from all enterprises of the country. Earlier this week Rosselkhoznadzor announced it could impose restriction on imports of Armenian dairy products "due to poor control and use of raw milk produced by Iranian companies.’ The Russian watchdog explained that it had imposed restrictive measures on Iranian dairy products. In response, the Armenian Food Safety Inspectorate stated that no violations of food safety that threaten human life and health were detected. It said the production of dairy products, as well as the entire food production chain is duly controlled. It said also the Russian concern is about Armenian imports of raw milk from the Islamic Republic of Iran, its use in the production of dairy products and their exports to the Russian Federation. Armenian Minister of Economy Vahan Kerobyan denied any political context behind the decision, saying that Armenian dairy producers do not violate production standards. At the same time, the minister admitted that raw milk from Iran is used in the production of dairy products. He added that Iranian companies are in the Eurasian Economic Union’s register and export of products made of their raw materials is not banned.
Prime Minister Nikol Pashinyan participated on March 29 in the Plenary Day of the official opening of the Summit for Democracy 2023 held online. The Summit for Democracy is held at the initiative of United States President Joe Biden.
Neither Turkey, nor Azerbaijan were invited to the Summit for Democracy. The head of the Ankara Political Center, ambassador, ex-representative of the brotherly country in NATO Fatih Ceylan said that “I believe that it is unfair not to invite Turkey and Azerbaijan to this event, considering them ‘anti-democratic’ countries.”
