Turkish financial technology company Papara has announced its acquisition of Rebellion, a neobank based in Spain. This strategic move signifies the Istanbul-based firm’s significant progress toward expanding its presence in Europe. The Artlife Kempinski Residences Yerevan complex under the international Kempinski Hotel brand will be commissioned in Armenia in early 2025. The world's leading producer of tobacco products Japan Tobacco International (JTI) and an Azerbaijani tobacco company Tabaterra signed an agreement on manufacturing JTI’s global brands in Azerbaijan and exporting them to Georgia.
Here is a rundown of the latest economic and business developments around Georgia's neighboring Armenia, Turkey and Azerbaijan during the last week.
Turkey
Turkey will increase corporate taxes and issue an additional motor vehicle tax, mainly to fund the recovery from major earthquakes that struck the country in February, according to a draft law presented to Parliament by the ruling Justice and Development Party (AK Party). The earthquakes in southeastern Türkiye killed over 50,000 people, left millions homeless, razed hundreds of thousands of buildings and inflicted severe infrastructural damage. Business groups, economists and the government have said rebuilding could cost more than $100 billion. The government promised to rebuild more than 600,000 homes for people left homeless by the quakes, including 319,000 to be delivered in a year. Among several proposed tax rises, the draft law raises corporate tax to 25% from the current 20%, while corporate tax for banks and financial institutions will rise to 30% from 25% currently.
Turkey's annual inflation rate came in at 38.21% in June, marking the lowest level since December 2021. The country's annual inflation was 36.08% in December 2021, 78.62% in June 2022, 48.69% in January 2023, and 39.59% in May 2023, according to data by the Turkish Statistical Institute. In June, the highest annual price change was seen in hotels, cafes and restaurants with 67.22%, while the lowest change was in housing with 14.76%. Turkey's monthly inflation reached 3.92% in June.
Turkish banks posted a net profit of 190.34 billion Turkish liras ($9.2 billion) in the January-May period. Total assets of the Turkish banking sector amounted to 16.84 trillion Turkish liras ($843.5 billion) as of this May, up from 11.3 trillion Turkish liras ($692.09 billion) in May 2022, according to data from the Banking Regulation and Supervision Agency. Loans, the largest sub-category of assets, reached 9.2 trillion Turkish liras ($447.5 billion) in May. On the liabilities side, deposits held at lenders in Türkiye – the largest liabilities item – totaled 10.35 trillion Turkish liras ($501.7 billion).
Turkey's exports dropped by 1.8% year-on-year to $123.4 billion in the first half of 2023, according to preliminary Trade Ministry estimates. Whereas Turkish imports rose 4.3% from a year earlier to $184.8 billion in January-June. The country's foreign trade gap reached $61.4 billion in the first half, up 19.1% from the same period last year. Turkey's motor vehicle exports totaled $15.1 billion, surging 16.4% from last year, while non-electrical machinery exports rose 15.6% to $12.5 billion, the ministry said in a statement. The other major sector that stood out in Turkish imports last month was electrical machinery, which totaled $7.5 billion, a 14.7% hike. Germany continued to be the main recipient of Turkish exports with $10.7 billion from January to June, followed by the US with $7.4 billion, Italy with $6.2 billion, the UK with $5.9 billion, and Russia with $5.8 billion. The country’s largest inbound shipments were from Russia with $24.8 billion over the six-month period. China was the second-largest exporter to Türkiye in January-June, with $22.3 billion, followed by Germany with $13.4 billion, Switzerland with $11.8 billion, and the US with $7.6 billion.
Turkish rapid delivery startup Getir is set to cease its business in Spain and lay off its entire workforce there of 1,560 after failing to raise enough capital in a recent funding round, according to the country’s biggest trade union CCOO. “We condemn the disastrous business management of Getir, which has not known how to grow or have a market strategy in Spain,” the union said in a statement. “Now its staff will suffer the biggest harm.” After their rapid expansion during the COVID-19 pandemic, quick commerce businesses have been hit by a fall in lockdown-driven demand for deliveries and rising interest rates, while investors are souring on loss-making tech firms. Spain’s food delivery market is dominated by Delivery Hero-owned Glovo, the Netherlands’ Just Eat Takeaway and Uber Eats; all three gained market share after Britain’s Deliveroo exited the country in late 2021.
Turkish financial technology company Papara has announced its acquisition of Rebellion, a neobank based in Spain. This strategic move signifies the Istanbul-based firm’s significant progress toward expanding its presence in Europe. Neobanks are innovative financial institutions that exclusively operate on mobile and internet platforms, omitting physical branches. Rebellion stands out among its peers as it offers a range of financial products and services, including money transfers, prepaid cards and Cashback, catering to the financial needs of the Y and Z generations. Notably, Rebellion has garnered positive ratings for its mobile application, solidifying its position as a leading player in the Spanish financial technology sector. Founded by Sergio Cerro and Alex Sagrado in 2017 and turned into one of the leading neobanks in the Spanish market, Rebellion is known to have received an investment of 15 million euros to date. Rebellion was Papara's first acquisition agreement completed in Europe in 2023.
Car sales in Turkey hit another all-time high in June, industry data showed, adding to the peaks since the beginning of the year, propelled mainly by the increase in vehicle supply. A record 110,861 passenger cars and light commercial vehicles exchanged hands last month, the Automotive Distributors and Mobility Association (ODMD) said in a statement, marking a 37.5% year-over-year increase. In contrast, around 80,652 units were sold in the same month a year ago. June followed a May record of 111,356 units, marking a 70.9% increase on an annual basis, according to the ODMD data. The June peak came despite a nine-day Qurban Bayram, or Eid al-Adha, holiday. The religious holiday generally lasts four days, but Türkiye extended the break to cover the period from June 24 through July 2.
Electric vehicle (EV) sales in Turkey jumped over 465% in the year through June, spurred by the increasing momentum in the deliveries of the country's first indigenous car and the arrival of new brands. Some 12,792 battery-power cars exchanged hands in the first half of the year.
Factory activity in Turkey expanded at a steady pace in June, although new orders growth slowed and price pressures grew as the currency weakened. The Purchasing Managers' Index (PMI) for manufacturing came in at 51.5 in June, unchanged from the previous two months, staying above the 50-point line that separates expansion from contraction, the Istanbul Chamber of Industry (ISO) and S&P Global said.
Egypt and Turkey have appointed ambassadors to each other’s capitals for the first time in a decade to restore normal diplomatic relations. Consultations between senior foreign ministry officials in Ankara and Cairo began in 2021 as Turkey sought better ties with Egypt, the United Arab Emirates, Israel and Saudi Arabia. Normalization between Ankara and Cairo accelerated after Egypt’s President Abdel Fattah al-Sisi and his Turkish counterpart Recep Tayyip Erdogan shook hands in Doha at the World Cup in 2022. Al-Sisi and Erdogan agreed to exchange ambassadors in May.
On Friday, Turkey’s president Erdoğan hosted his Ukrainian counterpart, Zelenskyy. Recep Tayyip Erdoğan said Ukraine deserves to become a member of the NATO military alliance, as he held a joint news conference with President Volodymyr Zelenskyy in Istanbul to discuss regional and global developments and bilateral ties. "Ukraine deserves to be a member of NATO," Erdoğan told reporters, adding that Türkiye has made the "most intense efforts" to end the Russia-Ukraine war through negotiations on the basis of international law. Erdoğan continued by saying that Türkiye will provide the necessary support to rebuild Ukraine. Regarding the Black Sea Grain Initiative, Erdoğan said he hopes for an extension of the deal, which is set to expire on July 17. The Turkish president also urged both Russia and Ukraine to go back to peace talks. He noted that he has been holding discussions for the exchange of prisoners. "We listened to Mr. President from the Ukrainian side regarding the exchange of prisoners and we are also in discussions with the Russian side," he said.
Russian President Vladimir Putin will next month pay his first visit to Turkey since the Kremlin launched its invasion of Ukraine 500 days ago, Turkish leader Recep Tayyip Erdogan said. “Next month Putin will pay a visit to Turkey,” Erdogan told a joint media appearance with visiting Ukrainian President Volodymyr Zelenskyy, adding that he would discuss prisoner swaps with the Russian ruler. Erdogan also said that he was pressing Russia to extend a Black Sea grain deal by at least three months and announced a visit by President Vladimir Putin in August.
Armenia
Consumer prices in Armenia in late June 2023 were down 0.5% as opposed to June 2022, the National Statistical Committee (NSC) said. According to NSC numbers, the consumer prices in late June were down 1.4% compared to the previous month of May. Prices for food and non-alcoholic beverages decreased by 5.5% year-on-year. Prices of alcohol and tobacco products went up 8.6%, while prices for clothing and footwear rose by 4.8% and utilities grew by 2.2%. Prices of household goods and appliances rose 6.6%. Health care prices rose 3.42%, transportation prices recorded a decline of 3.91%, communications prices decreased by 0 2%, prices for recreation and culture events increased by 3.4%, education services rose in price by 4.7%, restaurant and hotel prices upped 6.6%. Also, prices of non-food products in June 2023 compared to June last year were up 0.3%. Prices for services in June 2023 compared to June 2022 were up 3.9%.
Armenia's foreign trade in January-May 2023 surged by 86.9% from the same time span of 2022 to over $7.3 billion. In May 2023 alone the foreign trade was worth over $1.5 billion, an increase of 50.5% compared to May 2022 and an increase of 2.3% compared to April 2023. Armenia's trade with Russia doubled to over $2.5 billion, trade with Belarus also doubled to over $80 million, while trade with Ukraine grew by 15% to over $38 million. Armenia's trade with EU countries grew by 50.3% to about $1.2 billion. The trade with Germany grew by 93% to $294. 9 million, trade with the Netherlands grew by 44.8% to over $172 million, trade with Italy grew by 46.1% to $163.7 million, trade with Poland grew by 3.5 times to $101.3 million and trade with France soared by 87.9% to $66.5 million. The trade with China upped by 49.3% to $812.5 million, trade with the UAE grew by more than 5 times to $465.1 million, trade with the USA upped 2.4 times to $308 million, trade with Iran grew by 15.2% to $283.1 million, trade with Japan grew by almost 6 times to $182.4 million, trade with Georgia grew by 11.6% to $105.4 million, trade with Iraq fell by 2.4% to $86.1 million and trade with Republic of Korea almost tripled to $75,8 million.
Armenia's domestic trade upped 24.5% in the first five months of 2023 from the same time span of 2022 to over 1.8 trillion drams ($4.7 billion)), the National Statistical Committee reported. It said in May 2023 alone the domestic trade grew by almost 29% from May 2022 to 428.5 million drams ($1.1 million).
The number of foreign tourists visiting Armenia in the first half of the year amounted to 1 million, a 30% year-on-year growth, according to the Tourism Committee, an affiliation of the Economy Ministry. In June 2023 alone, some 199,000 foreign tourists visited Armenia, up from 130,000 in June 2022 and 154,000 in June 2019. According to the official data, in the first half of the year most foreign tourists were from Russia (52% or 519 thousand people), Georgia (11% or 115 thousand) and Iran (6% or 58 thousand). According to official statistics, 451,850 foreign tourists visited Armenia in January-March 2023, compared to 249,361 during the same period of 2022, an increase of 81.2%. According to Economy Minister Vahan Kerobyan's forecast, more than 2 million tourists are expected to visit Armenia this year.
Armenia was the world’s sixth best foreign direct investment (FDI) performer relative to the size of its economy in 2022, according to the Greenfield FDI Performance Index-2023, which is compiled annually by fDi Intelligence, a research center of the Financial Times Group. Armenia’s score in 2022 was 6.9. That means that given the size of its economy, the country attracted 6.9 times more projects than its GDP would suggest.
Armenian Prime Minister Nikol Pashinyan has announced an upcoming meeting with Azerbaijani President Ilham Aliyev. "My meeting with the Azerbaijani president, mediated by the head of the European Council, is to take place in Brussels in the near future. Unfortunately, the text of the peace treaty between Armenia and Azerbaijan is not yet ready for signing. I hope that the progress achieved (by Armenian and Azerbaijnai foreign ministers) in Washington will become more substantive during the upcoming meeting. All issues between the two countries should be resolved diplomatically," Nikol Pashinyan said.
Armenia's service sector upped by almost 20% in the first five months of 2023 as opposed to the same months of 2022 to over 1.7 trillion drams ($4.4 billion). In May 2023 alone the sector grew by 12.3% from May 2022 to over 251 billion drams. But compared to April 2023, it was down 1.1%. Financial and insurance services accounted for 26.0 % of the total having grown by 4.7% y-o-y. Information and communication services grew by 58.7%. Transport services grew by 35.8%. Hotel and catering services grew by 23.8%, while health and social services grew by 3%. Scientific and technical services grew by 14.3%, real estate-related services fell by 0.6, administrative and related services grew by 3.6% and education services grew by 11%.
In June 2023, petrol price in Armenia were down 22.7% compared to June 2022, while diesel fuel prices were down 29.8%. At the same time, petrol prices in June 2023 increased by 10.5% compared to May of the same year, while the prices of diesel fuel decreased by 8.9%. Petrol and diesel fuel prices in June this year were down 7.3% and 17.7%, respectively, compared to December last year. Overall, according to the statistical data, prices of non-food goods in June 2023 compared to June last year were down 0.3%.
Armenia's power generating facilities produced a little over 3.7 billion kWh of electricity in January-May 2023, a drop of 3.1% as opposed to the first five months of 2022. Thermal power plants accounted for 47.8% of the total electricity output or over 1.7 billion kWh, down 12.1% compared to the first 5 months of 2022. The nuclear power plant accounted for 26.6% or a little over 1 billion kilowatt-hours, an increase of 19.8%, and hydroelectric plants produced about 860 KWh or (21% of the total, a year-on-year decrease of 21.2%. Solar power plants produced 76.5 million kWh of electricity (4.6% of the total, up 85%, and wind farms produced 1.1 million kWh (up 4.2%).
Armenian Airlines air company has launched flights between Yerevan and Turkish Istanbul, Armenia International Airports company (it runs Zvartnots airport in Yerevan and Shirak airport in Gyumri) said. The airline will operate two flights a week on Wednesdays and Sundays.
Armenia’s construction sector grew by 16.7% in the first five months of 2023 from the first five months of 2022 to over 131 billion drams ($341 million). In May alone, the sector surged by 18.4% as opposed to May 2022 to over 36.1 billion drams ($94 million).
Russian Wildberries is planning to build a logistic center in Armenia, founder and CEO of Russia's largest online retailer Tatiana Bakalchuk said. According to her, the logistic center will improve greatly the opportunities for local businesses to comfortably trade from their country. 'This is especially important for small and micro businesses, which face some logistical difficulties in exporting their goods in Russia on their own. It will be a good opportunity for them to trade through Wildberries when there is a logistics center in Armenia," Bakalchuk said. According to her, one in every six to seven people in Armenia uses the marketplace and sales have quadrupled compared to last year. The marketplace receives unique goods from Armenia, ranging from sweets to children's clothes and shoes. At present about 2 thousand companies from Armenia are registered at the marketplace, but only about 300 of them are active. By the end of May 2023, there were as many as 271 affiliate and own delivery points of Wildberries in Armenia.
The Artlife Kempinski Residences Yerevan complex under the international Kempinski Hotel brand will be commissioned in Armenia in early 2025. Kempinski Hotel brand will take over luxury management of the ‘five-star’ complex after its commissioning. The total budget of the project is estimated at 80 billion drams (about $207 million).
Azerbaijan
The world's leading producer of tobacco products Japan Tobacco International (JTI) and an Azerbaijani tobacco company Tabaterra signed an agreement on manufacturing JTI’s global brands in Azerbaijan and exporting them to Georgia. As part of the strategic partnership, world-famous brands such as Sobranie, Winston, and Camel sold in Georgia belonging to the JTI company will now be produced by Tabaterra in Azerbaijan. “The mentioned export agreement will make a significant contribution to the economy of Azerbaijan, as well as to local production in the country. Thus, this agreement will provide our country with a foreign exchange flow of around $13m annually," Director of Tabaterra CJSC Elman Javanshir said.
During the first 6 months of this year, freight transportation by railways of Azerbaijan increased by 7% to 9,157,703 tons, Azerbaijani Railways said. Some 2,378,078 tons of cargo were imported to Azerbaijan by railways in the reporting period, and 1,666,091 tons of cargo were exported. Within the country, 1,585,836 tons of cargo were transported by railways. Transit cargo transportation in the first half of 2023 was 3,527,698 tons.
During the first 6 months of this year, 3,230,728 passengers were transported by the railways of Azerbaijan, 52% more than a year ago, Azerbaijan Railways CJSC said. Some 3,075,520 passengers were transported on the Absheron circular railway line within 6 months, which is 47% more than in the same period last year. Since the beginning of 2023, 125,772 passengers have traveled on the Baku-Ganja (Agstafa)-Baku route in regional passenger transport. 9,704 passengers were transported on the Baku-Gabala-Baku route, which started operating for the first time since March 18 of this year.
The Central Bank of Azerbaijan (CBA) ended 2022 with 63.955 million manats ($37.62 million) in net loss, down 60.1% from the previous year. Net gains of the CBA from trading in currencies in 2022 amounted to 4.09 million manats ($2.41 million).
As of January 1, 2023, the assets of the Central Bank of Azerbaijan (CBA) amounted to 30,861.987 million manats (roughly $18.15 billion), 16.85% more than a year ago.
As of January 1, 2023, the loans granted by the Central Bank of Azerbaijan (CBA) to local banks stood at 288.889 million ($169.93 million), down 18.9% from the previous year.
From July 8, Azerbaijan applies a visa-free regime on travels to the United Arab Emirates (UAE). The citizens can stay in each other’s territory for 90 days without a visa.
