Turkey announced a fresh discovery of a new oil reserve in the country's eastern region. Oil reserves are said to make $2.9B annual financial contribution. Turkey has closed its airspace to flights by Armenian aircraft in retaliation for the erection of a monument in the Armenian capital that Ankara says honors people responsible for the killings of Turkish officials. The Central Bank of Azerbaijan (CBA) has raised the interest rate from 8.75 percent to nine percent.
Here is a rundown of the latest economic developments around Georgia's neighboring Turkey, Azerbaijan and Armenia during the last week.
Turkey
Turkey's President Recep Tayyip Erdogan announced a fresh discovery of a new oil reserve in the country's eastern region. Oil reserves are said to make $2.9B annual financial contribution. Turkish President Recep Tayyip Erdogan revealed the news at an opening ceremony for the Karapinar solar power plant and other recently completed projects in central Konya province, announcing that the oil discovery in Cudi and Gabar near Sirnak would yield a production capacity of 100,000 barrels per day. The reserves are of such high quality that they have the potential to transform the country into an energy exporter," Erdogan said.
Falling for a sixth consecutive month, Turkey's annual consumer inflation rate slowed to a 16-month low of 43.68% in April. April's figure, announced by the Turkish Statistical Institute (TurkStat), was down from 50.51% in March, bucking the market forecast of 51.33%.The inflation rate was 69.97% in April 2022. Prices increased at a slower pace in furniture – 43.18% in April versus 56.12% in March – as well as in food and non-alcoholic beverages, which rose 53.92% in April compared to 67.89% in March, and in housing, with a 43.18% rise last month from the previous 56.12% increase. The highest price increase on a yearly basis was in health with 66.62%, while the lowest was in clothing and footwear with 13.82%.
Turkish e-commerce giant Trendyol is set to enter the Azerbaijani market, the Turkish industry and technology minister announced. The move will increase trade volume between Turkey and Azerbaijan. Trendyol, the online marketplace that started in 2010, has signed a cooperation agreement with major Azerbaijani conglomerate Pasha Holding, and the two will form a joint company for e-commerce activities.Caglayan Cetin, the head of Trendyol Group, said the two firms have taken the first step and the new website will start its operations as of May 3.The firm, however, will fully start its activities in Azerbaijan once the infrastructure work is complete, he added. Last year, the main source of foreign orders to Trendyol was Azerbaijan, Cetin said.He shared that according to mobile data analysis platform App Annie, Trendyol was the most downloaded application in Azerbaijan in 2022.
Turkish Airlines announced that it registered a net profit of 4.4 billion liras ($233 million) in the first quarter of 2023, led by a strong recovery in international demand, notwithstanding the adverse effects of the devastating twin earthquakes that struck Turkey in February. It marked the seventh consecutive quarter that the national flag carrier posted a net profit after the air travel sector was hit hard in 2020, when the first wave of the COVID-19 pandemic was felt in earnest. The airline saw record-high first-quarter revenue in the January-March period, reaching 82.1 billion liras ($4.4 billion), up 43% year-on-year. Accounting for 84% of total revenue, passenger revenue rose by 83% to $3.6 billion. Turkish Airlines increased the number of its fleet and workforce by 10% compared to last year. It carried over 17 million passengers in the three months to March, with a load factor of 80.1% on domestic routes and 81.4% on international routes. The airline's earnings before interest, taxes, depreciation, amortization and rent (EBITDAR) totaled $770 million on the backing of strong revenue growth, it said.
Share of solar energy in Turkey's installed electric power exceeded 9% as of end-March. Turkey's solar energy capacity is approaching 10,000 megawatts, generated from power plants in more than 78 cities as of end-March. Turkey has solar power plants in 35 provinces, according to data of the Energy and Natural Resources Ministry. Its installed electricity power reached 104,348 megawatts, whereas installed solar energy power amounted to 9,820 megawatts. The share of solar energy in Turkey's installed electric power was at 9.41% as of the end of March.
Vehicle sales in Turkey rose nearly 63% year-over-year and marked the highest April figure ever. Some 97,679 units of passenger cars and light commercial vehicles exchanged hands last month, marking the highest level since at least 2012. It compared to 60,035 units sold in the same month a year ago. Sales stood at 61,488 units in April 2021, 26,457 in 2020, 30,971 in 2019 and 71,126 in 2018.
Armenia
Turkey has closed its airspace to flights by Armenian aircraft in retaliation for the erection of a monument in the Armenian capital that Ankara says honors people responsible for the killings of Turkish officials, Foreign Minister Mevlut Cavusoglu said. Cavusoglu warned that Turkey would take further measures if the monument in Yerevan is not removed. The move came as Turkey and Armenia, which have no diplomatic relations, had been engaged in talks to normalize ties and put decades of acrimony behind. They appointed special envoys who have held several rounds of talks. Their discussions had resulted in an agreement to resume charter flights between Istanbul and Yerevan. The two countries have a more than century-old bitter relationship over the deaths of an estimated 1.5 million Armenians in massacres, deportations and forced marches that began in 1915 in Ottoman Turkey. Historians widely view the event as genocide. Turkey vehemently rejects the label, conceding that many died in that era but insisting that the death toll is inflated and the deaths resulted from civil unrest.
The 12-month consumer inflation in Armenia in April 2023 was 3.2%, according to the National Statistical Committee (NSC). It said compared to March 2023, prices in April 2023 were down 0.1%. In January-April 2023 prices were up 6.2% against the same period of 2022.
Armenia’s foreign trade doubled in January-March 2023 compared to the same period of 2022 to more than $4.2 billion, the National Statistical Committee (NSC) said. In March 2023 alone, the country’s foreign trade amounted to about $1.7 billion, which was 2.5 times more than in March 2022. It was up 23.7% compared to February 2023. Armenia’s trade with CIS countries amounted to about $1.6 billion having increased by 2.3 times. The largest foreign trade partners were Russia (about $1.5 billion, up 2.3 times against the first three months of 2022), Belarus (about $51 million, up 3.1 times) and Ukraine (about $24 million, down 2.5%). Armenia’s trade with EU countries amounted to over $678.1 million, a 64.6% growth year-on-year. The top five largest trade partners were Germany (more than $173.6 million, up 97.7%), the Netherlands (over $116.4 million, up 84.7%), Italy (over $87.6 million, up 48.3%), Poland (over $55.5 million, up 4 times) and France (over $36.2 million, up 86.7%). Armenia’s trade with China soared by 43.5% to $448.8 million. Trade with the UAE grew tenfold to $299. 5 million, trade with USA grew by 2.7 times to $173.8 million and trade with Iran grew by 22.6% to $172.1 million. Armenian exports increased 2.3-fold against January-March 2022, amounting to about $1.7 billion.
Armenia’s permanent population is just below 3 million people, according to preliminary data of a census conducted by the authorities last October and published last week. The Statistical Committee says that the figure of 2,928,914 also includes those people who usually live in the country, but have been absent from it for up to a year. It is by about 90,000 people less than Armenia’s permanent population was according to a similar census conducted in 2011. The population that was physically in Armenia at the time of the census in 2022 was by about 233,000 less than 12 years ago. Last year’s census of the population was third to be conducted in Armenia since the country gained independence in 1991. Originally it was due to be held in 2020, but had to postpone twice – first until 2021 and then until 2022 – because of the COVID-19 pandemic. Specialists in Armenia have not yet done any in-depth analysis of the results of the latest census of the population, pending the final data to be presented by the authorities. But some demographers already see a troubling pattern.
Armenia's Central Bank has decided to leave the refinancing rate unchanged at 10.75%. The regulator said in a press release that the Lombard repo rate has also been left unchanged at 12.25%. The borrowing rate for local commercial banks has been left unchanged as well at 9.25%. The last time the Central Bank of Armenia changed the refinancing rate was on December 13, when it was raised by 0.25 percentage points to 10.75%.
In the first three months of 2023 Armenia’s power generating facilities produced over 2.4 billion kWh of electricity, which is 2% less than in the first three months of 2022, the National Statistical Committee (NSC) reported. It said thermal power plants produced over 1.1 billion kWh of electricity or 51.2% of the total. Compared to the first quarter of last year the figure was down 6.1%. The nuclear power plant accounted for 29.9% or 939.2 million kWh (1.6% growth), and hydroelectric plants accounted for 15.1% generating 289.2 million kWh (9.1% fall). Solar plants, whose share was 3.8%, produced 74.1 million kWh of electricity (2.1 times growth), and wind farms produced 0.9 million kWh (a drop of 9.5%). This is the first time in independent Armenia that the number of the country’s permanent population, though slightly, but dropped below 3 million.
Petrol price fell by 28.9% and that of diesel fuel by 11.8% in April 2023 compared to April 2022. Petrol and diesel fuel prices in April 2023 decreased by 1.6% and 2.7%, respectively, compared to March of the same year. At the same time, petrol and diesel fuel prices in April this year were down 15.8% and 8.7%, respectively, compared to December last year. Overall, according to statistical data, prices for non-food products in April were up 2.7% in 2023 April when compared to last April and up 0.1% compared to March, 2023.
Azerbaijan
The Central Bank of Azerbaijan (CBA) has raised the interest rate from 8.75 percent to nine percent. The upper limit of the interest corridor was raised from 9.75 percent to 10 percent, and the lower limit - from seven percent to 7.5 percent. "The CBA doesn't aim to achieve any specific percentage of interest rate, Executive Director at the CBA Vugar Ahmadov said during a press conference on changes in the parameters of the interest rate. By raising or lowering the refinancing rate, we effectively influence the financial market, curbing and mitigating inflation. If we see that the market is stable, and there are no negative effects on the economy or inflation, that is, the trajectory is positive, then we make a pause, he explained. If this stability will continue, we’ll reconsider the possibility of lowering or raising the interest rate," Ahmadov said.
Azerbaijan Railways increased cargo, passenger transportation. Azerbaijan Railways CJSC transported 4,457,000 tons of cargo in the first quarter of this year, 17% more than a year earlier. Some 2,036,000 tons of the shipments were international (+33.9%), 1,651,000 tons (+15.9%) were transit, and 771,000 tons (-10.8%) were domestic. Azerbaijan Railways CJSC transported 1.51 million passengers in the first quarter of 2023, up 60% from the previous year. Some 1.46 million passengers were transported by the Baku-Sumgayit train, and 0.05 million by the Baku-Aghstafa and Baku-Gabala trains, respectively, up 55% and 20 times from a year earlier.
Сargo transportation by the Baku-Tbilisi-Kars (BTK) railway since its commissioning has exceeded 2.4 million tons. In 2022 alone, 691,000 tons of cargo were transported along this route. Thanks to Baku-Tbilisi-Kars, railway cargo from London can reach Beijing in 12-15 days. By sea transport, the same deliveries from Europe to Asia through Africa are carried out in 45-62 days. When using the Russian route, you need 32 days for the delivery of cargo from Beijing to Europe. BTK was launched on October 30, 2017. The length of the BTK is 829 km, 504 km of which runs through the territory of Azerbaijan, 246 km - Georgia, and 79 km - Turkey. The new road made it possible to reduce the time for deliveries of goods between Asia and Europe to 15 days.
Azerbaijan’s solar power capacity in 2022 amounted to 51 MW, said the latest publication from the International Renewable Energy Agency (IRENA). According to the report, this 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), IRENA said. 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).
