Less than four weeks were left before elections in Turkey and consequently, the main news from Georgia’s southwest neighbor were mostly around inauguration of large-scale projects, including launch of Turkey’s first delivery from a Black Sea gas reserve, which in President Recep Tayyip Erdogan’s words, is “a historic milestone on Turkey’s path to energy independence.” Armenia has hosted the first trilateral consultations with India and Iran, two increasingly significant partners for Yerevan, which is in search for new sources of security as Armenians feel they have been let down by their traditional security guarantor, Russia. Azerbaijan, gas-rich Caspian nation produced 8 billion cubic meters of natural gas in the first two months of 2023. Gas exports from the country during this period stood at 4.3 billion cubic meters, 13 percent more than in the same period last year.
Below are the main economic and business developments in Georgia’s neighboring Turkey, Azerbaijan and Armenia during the week of April 16-23.
Turkey
President Recep Tayyip Erdoğan on Thursday launched Turkey’s first delivery from a Black Sea gas reserve a few weeks ahead of a general election as Ankara aims at energy independence. The ceremony comes as Erdoğan braces for a tight race on May 14 in what is widely seen as the most consequential vote in Turkey’s modern history. In 2020, the country discovered gas reserves off the coast of Zonguldak in the Black Sea region, which Erdoğan hailed at the time as Turkey’s largest-ever natural gas field and a way to wean the country off its dependence on energy imports. In June, Turkey started the construction of an underwater pipeline connected to the seabed from the port of Filyos — around 400 kilometers (250 miles) east of İstanbul on the Black Sea coast. The facility will begin producing 10 million cubic meters of gas daily in a first phase — which Erdogan said is expected to reach 40 million cubic meters a day after other wells go into operation. Experts say 10 million cubic meters of gas per day would meet around 6 percent of Turkey’s annual consumption, which stands at 60 billion cubic meters, delivering a boost to the economy. “This is a historic milestone on Turkey’s path to energy independence,” Erdoğan said at a ceremony in Zonguldak broadcast live on Turkish television. “When we reach full capacity, we will meet 30 percent of our country’s gas needs” from the Black Sea reserves, he said. Turkey received 40 percent of its gas from Russia last year. It also imports gas from Azerbaijan and Iran, and Ankara has been seeking ways to diversify supply, especially after Russia launched its war on Ukraine last year.
The first phase of Turkey's landmark project, the Istanbul Finance Center (IFC), which will be home to lenders, was officially inaugurated on Monday. Public lenders Ziraat Bank, Halkbank and VakifBank will relocate their headquarter to the banking section. Speaking at the inauguration ceremony, Treasury and Finance Minister Nurettin Nebati said: "The IFC is expected to spike Turkey's financial services exports by three times by 2036, and its contributions to the country's gross domestic product may reach $130 billion within 15 years." The IFC will generate 102,000 qualified new jobs over the 15-year period, he added. A wide range of institutions, from banks to insurance companies, will unite in a single location under the IFC. The IFC is going to be home to Turkey’s most prominent financial institutions such as the Central Bank, Borsa Istanbul Stock Exchange, Banking Regulation and Supervision Agency, and the Capital Markets Board of Turkey.
Investments in Turkey’s gaming sector surged 60% year-on-year to $424.7 million in 2022. The funding went to 23 Turkish companies over the course of last year. Istanbul ranked 2nd in Europe among cities where most gaming deals were finalized. According to the report, the size of the global gaming market is expected to hit $185 billion this year, growing from $175.8 billion in 2021. Mobile gaming once again shaped the industry, accounting for around $92 billion of total revenues. Consoles made up about $52 billion and the total turnover of computer games was over $40 billion. The number of players worldwide was over 2.95 billion, while esports followers reached 549 million. In Turkey, the number of players jumped from 42 million to 44 million last year.
The number of passengers that traveled through Turkey's two busiest airports in Istanbul surged 38% year-on-year in the first quarter of this year. Istanbul Airport and Sabiha Gokcen Airport welcomed 24.5 million passengers in January-March, according to data compiled by Anadolu from the Directorate General of State Airports Authority. Istanbul Airport saw a total of 16.5 million passengers, with 3.6 million on domestic routes and 12.9 million on international flights. The mega airport served a total of 113,845 flights in the three months to March. Turkey's second-busiest hub Sabiha Gokcen Airport on the city's Anatolian side attracted 7.9 million passengers. Some 3.7 million passengers took domestic flights via Sabiha Gokcen Airport, while 4.2 million took international flights. Turkish airports welcomed over 38.9 million passengers, including transit passengers, in January-March, a rise of 31.5% from a year earlier.
The Turkish consumer sentiment surged to a 56-month high in April. The consumer confidence index jumped 9.2% month-on-month to 87.5 in April, according to the Turkish Statistical Institute (TurkStat) data. This has been the strongest hike since November 2015. The sub-indices for general economic situation expectation over the next 12 months and financial situation expectation of household over the next 12 months soared 14.7% and 12.8%, respectively, in April. Financial situation of household at present index rose 4.6% from a month earlier while assessment on spending money on durable goods over the next 12 months was up 4.5%. The index is a vital gauge of the economy’s overall performance, indicating people’s sentiments on financial standing and the general economic situation, along with expenditure and saving tendencies.
The central government budget of Turkey posted a deficit of TL 47.22 billion ($2.46 billion) in March, the Treasury and Finance Ministry said. This pushed the cumulative deficit for 2023 so far to TL 250 billion ($13 billion), mainly due to devastating earthquakes, the data showed. The primary balance, which excludes interest payments, logged a deficit of TL 2.15 billion ($111 million) in March, data revealed, bringing the total in the first three months to TL 149.37 billion ($8 billion). The budget deficit widened sharply after the earthquakes struck southern Turkey in February, killing over 50,000 people, toppling hundreds of thousands of buildings, and ripping the region’s infrastructure. In February, the central government's budget deficit stood at TL 170.56 billion ($8.8 billion), and the cumulative figure for the first two months of the year was TL 202.8 billion ($10.5 billion).
Armenia
Armenia has hosted the first trilateral consultations with India and Iran, two increasingly significant partners for Yerevan as it plays the geopolitical field during a rocky patch in its relationship with Moscow. The April 20 meeting involved various deputies and assistants in the foreign ministries of the three countries, and focused primarily on “economic issues and regional communication channels,” according to a readout by the Armenian foreign ministry. “The sides agreed to continue consultations in a trilateral format.” While the focus of the Yerevan meeting was trade, there was a strategic backdrop: Iran and India have been at the forefront of Armenia’s search for new sources of security as Armenians feel they have been let down by their traditional security guarantor, Russia.
Armenia and Russia agreed to resolve the situation caused by the ban on imports of Armenian dairy products to the Russian Federation stage-by-stage, the Russian government’s Rosselkhoznadzor agriculture watchdog said. Earlier Rosselkhoznadzor asked Armenian companies to suspend export of dairy products to Russia from April 5, 2023. The formal reason for the ban is the use of Iranian milk (banned in Russia) by Armenian dairy companies. It also cited lack of “proper oversight” by relevant Armenian authorities due to which low-quality and unsafe products could be exported to Russia. On April 17, the Armenian side initiated negotiations between the head of Rosselkhoznadzor Sergey Dankvert and the head of the Armenian Food Safety Inspection Authority Armen Hayrapetyan, with the participation of a representative of the Russian Foreign Ministry in Moscow.
Armenian wine exports surged from $23.3 million in 2021 to $36.4 million in 2022, from about 8.6 million liters in 2021 to about 12.2 million liters in 2022, according to the Vine and Wine Foundation. To date, Armenia exports wine to about 36 countries with 80% going to Russia, 6% and to the United States. Investments in winegrowing and winemaking industries soared 10-fold in 2022 from 2016, reaching 35 billion drams (91 million U.S. dollars). Wine production in Armenia in 2022 dropped to over 12.6 million liters from 13.1 million liters in 2021. Despite the drop in 2022, wine production is expected to grow this year. The number of wineries grew from 25 in 2018 to 150 in 2022. Sanctions against Russia have helped boost interest in Armenian wines in Russia.
Armenian banks' net profit in the first three months of 2023 surged to AMD 70 bln ($181 million) from AMD 32.5 bln ($84 million) in the same time span of 2022, having increased by 115%. The top five banks by size of net profit were Ardshinbank, Ameriabank, Inecobank, ACBA Bank and Converse Bank. These five banks accounted for 64% of all net profits of the banks.
The Armenian government decided to release 28.3 million drams ($74, 000) for the construction of the Margara checkpoint on the Armenian-Turkish border. On April 18, Armenian Prime Minister Nikol Pashinyan said it was very likely that Armenia and Turkey would normalize their relations. Pashinyan expressed hope that the Armenian-Turkish border would open soon to create grounds for the development of normal neighborly relations. Earlier Ruben Rubinyan, Armenian deputy parliament speaker and special envoy for normalization talks with Turkey said the Margara checkpoint on Armenian-Turkish border would be launched this summer. The Margara land checkpoint on the Armenian-Turkish border was opened for the first time in 30 years in February this year for Armenian trucks to deliver tons of food, medicine and other relief supplies to Turkey’s regions affected by the powerful earthquake. Turkey shut down its border for Armenia in 1993, in a show of solidarity with Azerbaijan, which was locked in a conflict with Armenia over the Nagorno-Karabakh region. Armenia also started the repair of a large section of Armavir - Gyumri road running along Armenia’s border with Turkey.
Azerbaijan
Italy purchased natural gas worth 465 421 790 euros from Azerbaijan via the Trans Adriatic Pipeline (TAP) in February 2023, Eurostat, the statistical office of the European Union said. Azerbaijan’s natural gas exports to Italy stood at 644.4 million cubic meters in February. Italy imported a total of 1.377 billion cubic meters of Azerbaijani gas worth 1.3 billion euros from January through February 2023. Azerbaijan produced 8 billion cubic meters of natural gas in the first two months of 2023. Gas exports from the country during this period stood at 4.3 billion cubic meters, 13 percent more than in the same period last year. Azerbaijan exports gas to Europe via the Trans Adriatic Pipeline, the final leg of the Southern Gas Corridor. The initial capacity of TAP is 10 billion cubic meters expandable to 20 billion cubic meters per year. TAP has delivered a total of 22 billion cubic meters since the start of commercial operation.
Declared gas exports from Azerbaijan to Romania amounted to 130.106 million cubic meters in January-February 2023, the Azerbaijani State Statistics Committee said. Gas deliveries from Azerbaijan to Romania began in January this year. Their total value was more than $131 million. Supplies to Romania accounted for 10.7% the total volume of declared gas exports from Azerbaijan in January-February 2023, and for 45.6% of declared gas exports to Europe. Declared exports to Europe amounted to 285.603 mcm.
In January-March 2023, the nominal income of the population of Azerbaijan amounted to just over 18.479 billion manats ($10.87 billion), 15.2% more than in 2022, according to the country’s State Statistics Committee. Last year, the per capita nominal income in the country increased by 14.4% compared to the previous year and reached 1,824 manats ($1,072).
In January-March 2023, information and communication enterprises in Azerbaijan provided services worth 692.7 million manats ($407.5 million), the State Statistical Committee said. Of this, 75.5% was rendered by the public sector. In 3 months, 37.8% or 262.1 million manats ($154.2) of the income obtained from services was formed in mobile phone communication.
The first batch of Kazakh oil from the Tengiz field via the Baku-Tbilisi-Ceyhan (BTC) pipeline was shipped from Türkiye's Ceyhan Port on April 22. According to SOCAR Midstream Operations LLC, the oil shipment, totaling 83.2 thousand tons (665 thousand barrels), was loaded onto the tanker "Alatau". The loading ceremony was attended by delegations from SOCAR, KazMunayGas, Tengizchevroil, Kazmortransflot and their subsidiaries.This milestone was achieved following continuous oil supplies from the port of Aktau in Kazakhstan to the Sangachal Terminal of Azertrans in Azerbaijan, with subsequent transportation to the BTC system, which began in March 2023. The loading of the next batch of Kazakh oil onto a tanker at the port of Ceyhan is scheduled for the end of May 2023. The transportation of Kazakh oil through BTC is being carried out under the Master Agreement between SOCAR and KazMunayGas, with a goal to transit 1.5 million tons of oil annually. The first shipment of Kazakh oil from the Tengiz field arrived at the Sangachal Terminal from Aktau via the “President Heydar Aliyev” tanker on March 23, 2023. In 2022, SOCAR executed significant projects to upgrade the gathering pipeline network at and outside the Sangachal Terminal to receive Kazakh oil into the BTC pipeline, increasing its capacity utilization.
In January-March of this year, 368,900 foreigners and stateless persons traveled to Azerbaijan from 157 countries, 49.8% more than in the corresponding period of 2022, according to the State Statistical Committee. 32.3% of the arrivals came from the Russian Federation, 21.5% from Türkiye, 9.1% from Iran, 5.6% from Georgia, 4.2% from India, 2.7% from Pakistan, 2.6% from the United Arab Emirates, 1.9% from Kazakhstan, 1.7% from each of Saudi Arabia and Uzbekistan, 1.6% from each of Ukraine and Belarus, 1.4% from Kuwait, 1 3% from Turkmenistan, 10.8% were citizens of other countries. Men accounted for 76.9% of the arrivals and women made 23.1%. Compared to the same period last year, the number of arrivals from India increased by 5.4 times, from Turkmenistan - 4.2 times, from Uzbekistan - 4.1 times, from China - 3.6 times, from Belarus - 3.4 times, from Kazakhstan - 2.3 times, from Pakistan - 2 times, from the Russian Federation - 1.8 times, from Israel - 1.7 times, from the USA - 1.5 times, from Georgia - 45.2%, from Great Britain - 40.6%, from Oman - 38.5%, from Kuwait - 32.4%, from Türkiye - 30.2%, from the United Arab Emirates - 28%.
