French giant TotalEnergies buys 50% stake in Turkey’s Rönesans Enerji. The Turkish startups have managed to attract $111 million in funding through 130 investment rounds in the first six months of the year, with a particular interest shown in ventures engaged in gaming and cybersecurity. Pakistan and Azerbaijan will sign a historic agreement on liquefied natural gas (LNG). Armenia will host 2024 World Conference on Information Technologies.
Here is a rundown of the latest economic, business and political developments around Georgia's neighboring Turkey, Azerbaijan and Armenia during the last week.
Turkey
Some $111 million (TL 2.91 billion) in capital poured into the Turkish startup ecosystem through 130 investment rounds in the first half of 2023, according to data from an industry monitor. Similarly to the global trend, the investment in Turkey declined, as venture capital funding worldwide plummeted in the first six months, as wary investors stayed away, coupled with lower demand amid sharply higher interest rates. Still, the amount and deal counts are eventually expected to surpass the pre-pandemic period.
Turkey's budget widened to a record deficit in June. The central government budget shortfall in June reached TL 219.6 billion (nearly $8.4 billion), the Treasury and Finance Ministry data showed, seven times the deficit a year earlier. It compared with a TL 118.9 billion surplus the previous month. The primary deficit, which excludes interest payments, widened to TL 182.3 billion, from TL 18.29 billion a year earlier, according to the data. In the first half, the gap amounted to TL 483.2 billion. The budget has been mainly strained by a sharp increase in spending to rebuild the southeastern region that was devastated by earthquakes in early February. Meanwhile, a circular signed by Treasury and Finance Minister Mehmet Şimşek has been sent to all state institutions reminding them of the need to make savings, reduce bureaucracy and use resources effectively.
Turkey's Central Bank raised its one-week repo rate, also known as the policy rate, by 250 basis points on July 20 to 17.5%, the highest level since October 2021. The bank's Monetary Policy Committee decided "to continue the monetary tightening process in order to establish the disinflation course as soon as possible, to anchor inflation expectations, and to control the deterioration in pricing behavior." In June, the bank had increased its policy rate by 650 basis points to 15% in the first hike in 27 months. The rate had been 18% in September 2021 before being cut to 16% the next month.
Russia's suspension of Black Sea grain deal stoked inflation worries and Turkey's lira sank to a new record low on July 17. The Turkish lira slid 0.4% to 26.3 per dollar, touching a fresh record low. Russia on Monday announced it had halted an unprecedented wartime deal allowing the grain to safely flow from Ukraine to parts of the world where millions are going hungry, a fresh threat to global food security.
Turkish Cargo, the air cargo transportation operator of the national flag carrier Turkish Airlines, claimed no. 3 spot in world's top air cargo carriers in May. Turkish Cargo increased its cargo tonnage, measured in freight ton kilometers, or FTKs – by 17% month-on-month, while its market share grew to 5.4% in April.
Turkey and the UK have agreed to hold talks on a new and modernized free trade agreement. The existing FTA, which the two countries signed after the UK left the EU, does not cover key areas such as services, digital, and data, the UK's Department for Business and Trade revealed. It added that the new deal was expected to boost bilateral trade and help British firms maximize opportunities.
Turkey's overall automotive production increased 13.2% year-on-year in the first half of 2023. Automakers in Turkey manufactured 735,231 vehicles in January-June, including automobiles and commercial vehicles. Automotive exports grew 8.3% during the same period, reaching 505,926 units. Turkey reaped $17.7 billion from vehicle exports in the six-month period, up 14.6% from the last year. The country's overall auto sales market expanded 54.7% from the prior year to 581,109 units. Passenger car production soared 20.7% annually to 462,401 units from January to June. Top international automakers – including Ford, Honda, Hyundai, Mercedes, Renault, and Toyota – have factories in Turkey, one of the world's main auto sales markets. In June, 118,898 vehicles were manufactured in Turkey, marking an annual decline of 12.2%.
Turkey and the United Arab Emirates (UAE) signed 13 agreements worth $50.7 billion during President Recep Tayyip Erdoğan's visit to the Gulf country. Both sides have reached an agreement to establish a High-Level Strategic Council, to be chaired by the presidents of Turkey and the UAE.
Antalya, a popular tourist destination in southern Turkey, continues to attract a significant number of visitors, showcasing a promising surge in tourism data this year. According to Antalya Governor Ersin Yazıcı, a total of 7.3 million tourists arrived in the city by air between Jan. 1 and July 18, underscoring the city's enduring appeal to travelers.
French oil and gas company TotalEnergies has acquired a 50% stake in Rönesans Energy, a subsidiary of one of Turkey’s top conglomerates Rönesans Holding. Rönesans Holding Chairman Erman Ilıcak said that Rönesans Energy would continue to operate in the field of renewable energy and has determined a roadmap.
Turkey's buoyant e-commerce sector registered a growth of more than 100% in 2022, hitting a volume of a staggering TL 800 billion (around $29.8 billion). E-commerce transactions soared to nearly 4.8 billion in volume, which is more than twice the figure recorded in 2020, overshadowed by the COVID-19 pandemic that confined people to their homes and prompted a boom in online shopping.
Azerbaijan
Pakistan and Azerbaijan will sign a historic agreement on liquefied natural gas (LNG) on July 24. Pakistan will buy liquefied gas from Azerbaijan on a monthly basis. 12 LNG tankers will be purchased from the Azerbaijani side. Earlier, the Pakistani minister said that the agreement with Azerbaijan would help eliminate the problem of gas shortages in the country during the winter season.
The Baku-Tbilisi-Ceyhan (BTC) pipeline transported 113.773 million barrels of oil through Turkey in January-June, 2023. This is 6.656 million barrels or 6.2% more than in the first six months of 2022. In June of this year, 19.658 million barrels of oil were pumped by BTC via Turkey. This is 1 million 993 thousand barrels or 11.3% more than in June 2022.
From January through June 2023, foreign institutions and organizations invested 1,939.4 million manats ($1.14 billion) in fixed capital in Azerbaijan, up by 20.7% from the previous year. 1,838.3 million manats ($1.08 billion) (94.8%) of the funds were invested by Great Britain, France, the US, Turkey, Japan, Switzerland, Russia, Norway, and Iran.
Azerbaijan received 918,800 tourists from 181 countries in 2023, 43.9% more than the previous year. In the first half of this year, the number of Azerbaijani citizens who traveled abroad increased by 16.3% compared to the same period last year and reached 791,700 people.
Azerbaijan imported 398.87 million cubic meters of natural gas from Turkmenistan from January through April 2023. The cost of natural gas imports from Turkmenistan to Azerbaijan amounted to over $59.18 million, which exceeds the figure of the first four months of 2022 by 4.8 times. Azerbaijan imported more than 151.96 million cubic meters of natural gas in the period from January through April of the previous year for an amount exceeding $12.15 million. Furthermore, Azerbaijan imported more than 1.19 billion cubic meters of natural gas worth $202.41 million in the first four months of this year. During this period, Turkmen gas accounted for 33.25 percent of Azerbaijan's total natural gas imports. Meanwhile, Azerbaijan imported more than 857 million cubic meters of natural gas worth $110.8 million from Turkmenistan last year.
BP and Azeri national oil company Socar have taken part for the first time in an Israeli licencing round for natural gas exploration, the latest sign of growing international interest in the Eastern Mediterranean basin. BP and Socar jointly placed a bid along with Israel's NewMed Energy for two offshore blocks in the fourth licencing round that closed last Sunday.
As of July 1 of this year, Azerbaijan's foreign exchange reserves amounted to $64,111 million. Of this, 85.7% or $54,915.1 million fell to share of the State Oil Fund (SOFAZ), $14.3% or $9,195.9 million to the Central Bank of Azerbaijan (CBA). In the second quarter of this year, the foreign exchange reserves of the country increased by $1,540.4 million or 2.5%. Thus, the foreign exchange reserves of SOFAZ grew by $1,477.5 million or 2.8% and the currency reserves of the CBA by $62.9 million or 0.7%. In the last year, the currency reserves of the country increased by $11,432.3 million or 21.7%. During the year, the foreign currency reserves of SOFAZ showed a rise of $9,608.3 million or 21.2%, while the foreign currency reserves - $1,824 million or 24.7%.
The assets of the State Oil Fund of the Republic of Azerbaijan (SOFAZ) amounted to $54,915,100,000 in the first half of 2023. During the period of January-June 2023, the budget revenues of SOFAZ amounted to 11.7 billion manats ($46.88 billion), and the budget expenses amounted to 2.68 billion manats ($1.58 billion).
Abu Dhabi state-owned renewable energy firm Masdar raised $750 million with debut green bonds on Tuesday, which will repay two $250 million bridge loans for a 200 MW solar PV project in Azerbaijan and a 500 MW offshore wind project in Uzbekistan, its chief financial officer Niall Hannigan said.
In June 2023, Azerbaijan ranked 116th among 180 countries for fixed broadband Internet speed with an average download speed of 29.47 Mbps. This shown no change compared to April and May. In terms of fixed broadband internet speeds, Singapore ranked first (241.29 MB/s) and Cuba ranked last (1.96 MB/s). Last month, Azerbaijan fell three notches in terms of mobile internet speed, ranking 59th among 140 countries with a speed of 40.39 Mbps.
Armenia
The 2024 World Conference on Information Technologies (WCIT), will be held in Yerevan, Chief of Staff of the Prime Minister Arayik Harutyunyan said. Armenia last hosted the event in October 2019. More than 2500 people from 70 countries attend the Congress. The World Congress on Information Technology (WCIT) is one of the largest & most prestigious ICT events in the world. It features discussions related to the evolution of the Digital Age.
Renovation of checkpoint on Armenian-Turkish border will be completed soon, the chairman of Armenia's State Revenue Committee (SRC) Rustam Badasyan said adding that Active renovation is underway at the Margara checkpoint on the Armenian-Turkish border. According to earlier reports, the Margara checkpoint was anticipated to be operational by early summer. The Margara land checkpoint 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. In December 2021, Armenia and Turkey appointed special envoys for normalization of relations. On March 12, 2022, Armenian and Turkish Foreign Ministers met on the sidelines of the Antalya Diplomatic Forum where they confirmed their governments’ readiness to advance the normalization process without preconditions, which is to be followed by the establishment of diplomatic relations and the opening of borders between the two countries.
The Armenian government has adopted a three-year action plan as part of an agricultural development strategy, designed for 2020-2030. Economy Minister Vahan Kerobyan said the strategy approved in December, 2019 is updated every three years. Kerobyan noted that the program consists of 7 parts aimed at confronting the existing challenges and developing promising areas. the results set for 2026, include increasing the gross output of agriculture up to 1.4 trillion drams ($3.6 billion); reducing the number of rural economic entities from the current 317 thousand to 280 thousand for cultivation efficiency through enlargement; increasing the annual value created by one rural economic entity up to AMD 4.5 mln; increasing the export of agro-food products up to $1.5 bln; making 75% of arable land cultivable, etc.
Armenian company Sepuh 1 assembles passenger cars from spare parts produced by Korean company Ssang Yong. The company plans to assemble the Tivoli crossover and Rexton SUV, as well as to start production of spare parts. The cost of the cars will range from $30-40 thousand. Sepuh 1 is the official representative of Ssang Yong. The company was registered in Armenia in 2018. Its owner is Armenian Janez Avetyan.
The Armenian side has agreed to a Russian proposal to hold a meeting with Azerbaijani Foreign Minister Jeyhun Bayramov in Moscow. Armenian Foreign Ministry spokeswoman Ani Badalyan said the future peace treaty between Armenia and Azerbaijan could be signed in Moscow. 'Russia is ready to organize a trilateral meeting of the foreign ministers in Moscow in the near future,” the Russian foreign ministry said in a statement. It offered to hold later a “Russian-Azerbaijani-Armenian summit in Moscow to sign the peace treaty.”
Armenian Minister of Economy Vahan Kerobyan and the Ambassador of Belarus to Armenia Alexander Konyuk met on July 17 to discuss expansion of cooperation between the countries in agriculture and construction industry, as well as the possibility of establishing a Trade House of Armenia in Belarus. Armenian-Belarusian trade amounted to about $84 million in January-May 2023, having doubled compared to the same period of 2022.
Exports of cars from Armenia to Russia have soared since last year’s invasion of Ukraine — from $800,000 worth of vehicles in January 2022 to just over $180mn worth of vehicles in the same month this year. Cars arrive primarily from the US via the Black Sea port of Poti in Georgia. Many are then brought to Armenia for customs clearance, as the country shares a customs-free trade bloc with Russia. The city of Gyumri is a key hub from where the vehicles head north to Russia by road, crossing through Georgia again. In January 2022, before the start of Russia’s invasion of Ukraine, Armenia imported $2.8mn worth of cars from the US. But a year later, that number soared to $29.5mn. Since then, the rate has continued to climb. In April this year, Armenia imported $34mn worth of US cars.
Iranian Energy Minister Ali Akbar Mehrabyan said that Iran and Russia will exchange electricity through Azerbaijan, including Georgia and also Armenia. “For the exchange of electricity with Russia, we used two routes - the Republic of Azerbaijan and Georgia-Armenia, and we are in the process of final negotiations and implementation,” Mehrabyan said. Iran's Energy Minister added that Iran is keen to exchange electricity with neighbors without payment. “We are looking forward to exchanging electricity with Russia through Azerbaijan. Connecting to the Russian power grid through Georgia and Armenia is also on the agenda,” he concluded.
