Turkey's Akkuyu nuclear power plant gained official nuclear facility status with the arrival of its first nuclear fuel. The plant has been built by Russia’s state nuclear energy company Rosatom. The $20bn, 4,800-megawatt project to build four reactors in the Mediterranean town of Akkuyu will allow Turkey to join the small club of nations with civil nuclear energy. The aviation authorities of Turkey, without prior notification, canceled the permission previously granted to the Flyone Armenia airline to operate flights to Europe through the Turkish airspace. The World Bank said that the share of Azerbaijan in the European gas market increased from 4.9 percent in 2021 to 6.9 percent in 2022.
Below are the main economic and business developments in Georgia’s neighboring Turkey, Azerbaijan and Armenia during the week of April 23-30.
Turkey
Turkey's Akkuyu nuclear power plant gained official nuclear facility status with the arrival of its first nuclear fuel, the Energy and Natural Resources Minister said. The nuclear fuel, uranium pellets, were brought to Adana Airport from Russia on Wednesday night under strict security measures. Each weighing 4.5 grams, the uranium pellets were then loaded onto three trucks and transported to the Akkuyu plant in southern province of Mersin. The first step was taken in 2010 for the country's first power plant, and construction began in 2018. The four reactors are currently under construction. The country’s energy and natural resources minister declared that a new energy resource has been added to diversify the nation’s energy portfolio. "Nuclear energy is no longer a distant target for Türkiye. Hopefully next year we will start generating electricity from nuclear energy," he said. According to Donmez, the four reactors will provide reliable, uninterrupted, sustainable and environmentally friendly energy continuously under an operation plan of 60 years with the option for a 20-year extension. The country will meet 10% of its electricity needs from the nuclear plant once all reactors are operational.
The number of newly established companies in Turkey rose by 8% year-on-year in the first quarter of this year. A total of 35,032 companies were set up in January-March, data from the Union of Chambers and Commodity Exchanges of Turkey (TOBB) showed. Among them were 3,878 foreign-partnered or foreign-funded companies, down from 4,336 last year. During the three-month period, 4,195 firms went out of business, an annual hike of 32.8% from a year earlier. In March, 11,319 new companies were set up, marking a slight rise of 1.2%. Some 1,254 new foreign-partnered or foreign-funded companies were launched in the country, versus 1,742 in March 2022. The number of firms that have gone out of business reached 1,451 in March, up 6.7% year-on-year.
The Central Bank of Turkey kept the one-week repo rate, also known as the policy rate, constant at 8.5%, in line with the market forecast. Meanwhile, the bank said that rising global inflation’s impact on both inflation expectations and international financial markets is being closely monitored. Financial markets are indicating that there may soon be an end to cycles of interest rate hikes by central banks, the statement said. It said that the Monetary Policy Committee (MPC) believes the current stance is adequate to facilitate the economic recovery following the recent massive earthquake in Turkey’s south while ensuring price and financial stability. Turkey’s lira edged down before the rate decision. On Thursday, the lira traded at 19.4320 against the dollar by 9 a.m. GMT, weakening from Wednesday’s close of 19.4200. The lira has plummeted to record lows this year as the central bank slashed interest rates.
Turkey’s central bank sold gold to support diminishing FX reserves amid lira pressure. The central bank’s gold reserves have been shrinking over the past seven weeks, according to official data, which show a decline of 9 percent during that period. Between March 3 and April 21, the bank sold 72 tons ($4.7 billion) of gold to shore up reserves, reflecting the urgency with which the bank is trying to maintain the USD-lira exchange rate below 20 lira. Inflation in Turkey has been on the rise for more than a year, though it may be easing somewhat. The most recent data indicate that annual inflation was 50.51 percent in March, down from 55.2 percent in February.
Turkey’s tourism income soared by 32.3% from a year earlier to $8.7 billion in the first quarter of 2023. More than one-fifth, or 20.8%, of tourism income was generated by visits of Turkish nationals residing abroad. Turkey welcomed 8.2 million visitors in January-March, a surge of 26.8% year-on-year. Some 20.4%, or 1.7 million, were Turkish citizens living in other countries. The average spending per night of each individual visitor amounted to $84 dollars over the three months, with visitors' average total expenditure at $1,062 per capita. Sports, education, and culture spending soared by 116.5%, while package tour expenditures ballooned by 83.4% and tour services expenditures by 82.1%. In the first quarter, the number of Turkish citizens who visited other countries more than doubled from last year, with the figure nearing 2.1 million. Their expenditures reached $1.4 billion in the three-month period.
Statistical authority of Turkey, TurkStat said that electric cars’ share of new registrations in Turkey more than doubled from 1.1% in January-March 2022 to 2.4% in the same period this year. During the first quarter of 2023, 4,870 electric cars were registered in Turkey. In the three-month period, 460,910 road motor vehicles were registered in the country, including 204,666 cars. The share of gasoline-powered vehicles among registrations in the first quarter was at 66.6%, down from 70.5% in the same period last year. Diesel-powered vehicles’ share was up to 20.5% from 16.5% over the same period, while hybrid cars' share dropped to 8.5% from 9.5%. The share of LPG-powered vehicles also dropped to 2% from 2.4%. In Turkey, as of the end of March, the number of road motor vehicles reached 26.94 million; cars' share was at 53.7%, small trucks 16.1%, motorcycles 15.9%, tractors 7.9%, trucks 3.5%, minibuses 1.8%, buses 0.8% and special purpose vehicles 0.3%. The country's first indigenous electric car brand Togg, which began to sell its first model T10X in the domestic market, is set to deliver 20,000 units of electric cars within this year. Over the last year, electric car registrations in the country totaled 8,312 units.
Turkey's exports surged 54.3% on a country basis in the first quarter of this year, with the largest outbound shipments being to Germany with a worth of $4.9 billion. Germany was followed by the US with $2.97 billion worth of Turkish exports in January-March, according to data of the Turkish Exporters Assembly (TIM). The third largest export destination was Italy with $2.9 billion, followed by the UK with $2.76 billion, France and Russia both with $2.48 billion, and Spain with $2.43 billion. Turkey's exports amounted to $61.6 billion in January-March, a rise of 2.5% from the same period last year. Exports to 13 countries exceeded $1 billion in the first quarter. Turkish exports to Saudi Arabia skyrocketed by 755% year-on-year, hitting $611.8 million in the three months to March.
The capacity utilization rate of Turkey's manufacturing industry grew in April. Local manufacturing industry units operated at 75.6% of their capacity this month, up 1.4 percentage points from March, the Turkish Central Bank data showed. The seasonally adjusted capacity utilization rate in the manufacturing industry increased 1.9 percentage points to 75.4% in December, down from 73.5% in the previous month. While the highest capacity utilization was recorded in investment goods at 79.1% in April, the lowest was seen in durable consumer goods at 71.9%.
Turkey has announced that it will impose a 130 percent tariff on certain grain imports, including wheat and corn, from May 1, according to a presidential decision. This move is largely seen as an effort to protect the local agricultural sector ahead of May 14 elections. Some traders have also suggested that the move could be in response to recent bans on grain imports from Ukraine by some European Union countries, which have caused a glut of grain and have been damaging local farmers’ livelihoods. Before the new tariff, there had been no duty on wheat, barley, rye, oats, corn or sorghum up until April 30, as stated in a previous regulation. But with the new decision, a 130 percent import tariff will be imposed on grain imports from May 1. Turkey’s wheat and barley harvest starts in May, and the government had previously reduced the duty on grains and other agricultural products in late 2020. The tariff was eliminated about a year ago.
Armenia
Armenia's economic activity in the first quarter of 2023 was up 12.2% from the same time span of 2022, the National Statistical Committee (NSC) said. It said all sectors of the economy posted growth with the exception of power generation sector. During the reporting period, industrial output amounted to about 556.6 billion drams ($1.4 billion), having increased by 3.6% compared to January-March 2022. Gross agricultural output amounted to over 88.7 billion drams ($230 million) with 1.4% growth as compared to the same period of the past year. The construction sector rose by 15.6% to over 64.8 billion drams ($168 million). The domestic trade in January-March this year was about 1.1 trillion drams ($2.85 billion), which was up 21% year-on-year. The services (excluding trade) surged by 23% from the first quarter of 2022 to 675.2 billion drams ($1.75 million). The National Statistical Committee did not provide data on average gross monthly wages.
Consumer prices in Armenia in January-March 2023 rose by 7.2% as compared to January-March 2022. Prices in March 2023 were up 0.7% from the previous month and up 5.4% from March 2022. According to the NSC, the prices of industrial goods in the first three months of 2023 decreased by 0.4% compared to the same period of 2022. In March of this year compared to March of last year, the prices were down by 2.7%.
Electricity production in Armenia in January-March 2023 dropped by 2% from the same period of 2022. Electricity generation in the reporting period amounted to over 2.4 billion kWh. Electricity production in March 2023 was down 7.8% when compared to February of this year, but was up 5.8% as opposed to March of last year.
Armenia’s foreign trade in January-March 2023 amounted to over $4.2 billion, which is 2 times higher than in the first quarter of 2022, according to the numbers. In March 2023 alone the foreign trade was up 23.7% compared to the previous month of February and up 2.5 times when compared to March 2022. In January-March 2023, the country’s foreign trade calculated in Armenian drams stood at about 1.7 trillion drams. Armenian exports in the first quarter of 2023, compared to the same period of 2022, increased 2.3-fold to over $1.6 billion. In March 2023 alone, compared to March last year, the rise was 2.7-fold. In Armenian drams the exports amounted to 653.3 billion. The imports during the reporting period amounted to about $2.6 billion, registering an increase of 89.1% compared to January-March 2022.
The aviation authorities of Turkey, without prior notification, canceled the permission previously granted to the Flyone Armenia airline to operate flights to Europe through the Turkish airspace, Aram Ananyan, Chairman of the Board of Directors of Flyone Armenia airline, told local media. "Turkish aviation authorities annulled the Flyone Armenia's permit for flying to Europe through Turkish airspace for reasons unknown to us and without any obvious reason and without any prior notice, putting our airline and our passengers in an uncomfortable situation," he said. He said the airline was working with the passengers of the canceled flights and would inform about the upcoming developments. It also asked for the understanding of the passengers for the inconvenience caused by reasons beyond their control. Ananyan also said that an aircraft of the company operating Paris-Yerevan flight had to land in Chisinau, Moldova, due to the closure of the airspace for the Armenian airline.
Azerbaijan
Azerbaijan’s state oil company (SOCAR) signed a memorandum of understanding (MoU) for the supply of additional gas to Europe with transmission system operators of Bulgaria, Romania, Hungary, and Slovakia. Ministers from the five countries signed the agreement at a ceremony in the Bulgarian capital Sofia, which was also attended by Azerbaijani President Ilham Aliyev and his Bulgarian counterpart Rumen Radev. The Azerbaijani presidency said additional Azerbaijani gas will be supplied through the upgraded transmission network systems of the four EU countries under the initiative called the “Solidarity Ring.” President Aliyev said the deal was an important step in diversifying energy resources in the region.
Azerbaijan’s solar power capacity in 2022 amounted to 51 MW, the International Renewable Energy Agency (IRENA) said, which is an increase of 6.25 percent, compared to 2021 (48 MW). In the reporting period, Azerbaijan’s solar energy capacity increased by 45.7 percent, compared to 2020 (35 MW), and by 54.5 percent, compared to 2019 (33 MW). Meanwhile, Azerbaijan’s total renewable energy capacity in 2022 amounted to 1,339 MW, which is an increase of 1.74 percent year-on-year (1,316 MW in 2021).
Azerbaijan has delivered 98.2 billion cubic meters of natural gas to Turkey, and SOCAR Turkey, a subsidiary of the State Oil Company of Azerbaijan (SOCAR), has transported approximately 9.3 billion cubic meters of gas so far.
The Russian largest online retailer Wildberries is considering entering the new markets. The founder and CEO of Wildberries Tatyana Bakalchuk told journalists in an interview that the company reviews the market of Azerbaijan, Georgia, and Tajikistan. “We are thinking to expand in the CIS countries. We are considering countries such as Azerbaijan, Tajikistan, and Georgia," Bakalchuk said and added that the timing of entering these markets speaks prematurely.
The volume of the active portfolio of the European Bank for Reconstruction and Development (EBRD) in Azerbaijan decreased by 2.4 percent or €21m amounting to €844 m. EBRD noted that currently, the number of implemented active projects was 35. It was noted that 87 percent of the portfolio or €730m is invested in sustainable infrastructure, 10 percent or €85m is invested in industry, trade, and agribusiness, and 3 percent of €29m is invested in financial institutions.
The World Bank said that the share of Azerbaijan in the European gas market increased from 4.9 percent in 2021 to 6.9 percent in 2022.
