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The Week in the Neighbourhood

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Madona Gasanova
30.07.23 16:27
136
World-famous courier firm DHL has signed a deal to buy Turkish parcel delivery company MNG Kargo and its subsidiaries. China's new foreign minister made first visit to Turkey. Armenia's economic activity was up 11.4% year-on-year in the first half of 2023. Azerbaijan considers joining construction of oil refinery in Pakistan.

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

World-famous courier firm DHL has signed a deal to buy Turkish parcel delivery company MNG Kargo and its subsidiaries. Turkey's parcel market is expected to post double­-digit growth over the next years, thanks to a young and dynamic population with high affinity for digitalization and online shopping. E­commerce is one of the focus areas of DHL Group's Strategy 2025 to strengthen the profitable core and secure long ­term growth.

The Central Bank of the Republic of Turkey revised its year-end inflation forecast upward for 2023, 2024 and 2025. The annual consumer inflation is projected to hit 58% this year, revised 35.7 points up from the previous forecast of 22.3%. The end-2024 forecast was raised to 33% from the previous projection of 8.8% and the end-2025 forecast to 15% from 5%. The upward revisions were because of Turkish lira-denominated import prices, output gap, food prices, administered prices and unit labor cost and forecast deviation and change in forecasting approach.

Turkey eyes its defense exports to soon exceed $10 billion. Turkish defense exports totaled $2.4 billion in the first half of 2023, and are expected to reach $6 billion by the end of the year. The Turkish defense industry is a large ecosystem that develops its own products with its worldwide contractors, SMEs, research institutions, technology and industry clusters. Turkey had a defense industry budget of approximately $5.5 billion in 2002, which has now reached $90 billion.

China's new foreign minister made first visit to Turkey. Wang Yi, the veteran diplomat was in the Turkish capital Ankara on Wednesday on his first visit abroad after China announced his new duty and met Hakan Fidan, Turkey’s new foreign minister, who took office after May 28 elections. The two top diplomats did not hold a news conference, and Wang was also received by President Recep Tayyip Erdoğan. Media outlets reported that Fidan and Wang discussed bilateral relations between the two countries, as well as regional and international developments.

Turkey’s trade deficit shrank 37.3% year-on-year to $5.16 billion in June. Turkish exports fell 10.5% from last year to $20.9 billion in June, while imports plunged 17.5% to $26.1 billion. Excluding energy products and non-monetary gold, Turkey last month ran a foreign trade gap of $299 million. The exports-to-imports coverage ratio rose to 80.2% this June compared to 73.9% in the same month last year. Turkey's outbound shipments to its main trading partner Germany totaled $1.78 billion in June, followed by the U.S. with $1.33 billion, the U.K. with $1.07 billion, Italy with $1.01 billion, and Iraq with $986 million. China was the main source of Turkey's imports in June with $3.76 billion, followed by Russia ($2.91 billion), Germany ($2.01 billion), Switzerland ($1.31 billion), and Italy ($1.12 billion). In January-June, Turkey's overseas shipments fell 1.9% year-on-year to $123.3 billion. Its imports, on the other hand, rose 4.1% to $184.58 billion in the same period. Turkey's foreign trade deficit grew 18.7% from the year before to $51.58 billion in the first half of this year.

Turkey's central bank unveiled a set of new measures to support a monetary tightening drive, in moves the country’s finance chief said were aimed at reducing public deficits and lowering inflation. The measures came days after the Central Bank of the Republic of Turkey slashed its benchmark policy rate by 250 basis points to 17.5%, the highest level since October 2021, and promised more tightening. The central bank’s new moves to support the tightening included raising the monthly maximum interest rate on credit card cash usage and overdraft accounts to 2.89%. It said the increase in the rate, from a previous 1.91%, was designed to control inflation and balance domestic demand.

The Baku-Tbilisi-Ceyhan (BTC) pipeline transported 113.773 million barrels of oil through Turkey in January-June, 2023. The figure 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.

Armenia

Armenia's economic activity was up 11.4% year-on-year in the first half of 2023. In June 2023 alone was up 9.9% when opposed to the previous month, while compared to June 2022 the growth amounted to 6.8%. According to the National Statistical Committee, the growth was reported by virtually all sectors of economy, except for electric power production and industrial goods price index.

In the first half of 2023, Armenia’s foreign trade turnover soared by 72.9% year-on-year to about $8.9 billion. In June 2023 alone, the foreign trade was up 7.9% from the previous month while compared to June last year it was up 21%. In January-June 2023. Armenian exports in the first six months of 2023 grew by 72.8% year-on-year to $3,266, 600,000. A 2.5% growth was recorded in June compared to June last year. Imports during the reporting period totaled $5,633,100,000, recording a 73% increase compared to January-June 2022. In June of this year, imports grew by 33.8% from June 2022.

Consumer prices in Armenia in the first half of 2023 increased by 4.2% year-on-year. At the same time, in June 2023 prices, compared to May of the same year, upped by 0.7%, while compared to June of the last year, the rise was 4%. The prices of industrial goods compared to the same period of 2022, decreased by 1%. At the same time, in June 2023 they were up 2.2% against June last year.

The number of officially registered jobs in Armenia in late June 2023 stood at 719,274, by 38,224 jobs or 5.6% more than in late June 2022. At the same time, the number of settlement documents issued by taxpayers, including cash register receipts, grew to 55.4 million, worth over 1 trillion drams ($2.6 billion). The number of transactions was up by 2.6 million (5% growth), while the amount was up 204.7 billion drams or $531 million (24.4% growth).

Armenian Airlines said it will launch direct flights between Yerevan and Batumi, Georgia's premier vacation destination on the Black Sea. The flights will be operated from August 11 on Tuesdays and Fridays. Established in 2022, Armenian Airlines is based at Yerevan's Zvartnots International Airport. It flies to Russian Moscow, Sochi, Vladikavkaz, Samara and Turkey's Istanbul. In the longer term, the carrier intends to launch flights to Egypt, the Middle East, Europe and Asia.

The average monthly gross salary in Armenia has increased by 13.7. The growth was contributed largely by certification of school teachers and military personnel. In June 2023 the average gross monthly salary was up 13.7% (by 34,469 drams or US$ 90) from June 2022.

Electricity production in Armenia dropped by 2.7% in the first half of 2023 compared to the same period of 2022. Electricity generation in the reporting period amounted to about 4.3 billion kWh. At the same time, electricity production in June 2023 was up 8.3% compared to May this year, while compared to June last year it was down 0.3%

Azerbaijan

Pakistan is currently in an advanced stage of negotiations with Saudi Arabia to establish a refinery. Azerbaijan and China may also become the participants in the project in Balochistan. Further details regarding the extent of China’s and Azerbaijan’s involvement are yet to be disclosed.

Kazakhstan's national oil and gas company KazMunayGaz is working jointly with the State Oil Company of Azerbaijan, SOCAR, on increasing the volumes of Kazakh oil transit via Azerbaijan.

Azerbaijan’s Su-25 fighter jet modernized by Turkey’s aerospace and defense company has successfully passed its first tests. According to plan, the Su-25 attack aircraft sent to Turkey was brought back to Azerbaijan after modernization work by Turkish Aerospace Industries. The vehicle successfully conducted its test flights: It was modernized under the Lachin project and added to the inventory of the Azerbaijani military pilots.

Azerbaijan must reopen the Lachin corridor, the European Union said, expressing serious concern over the worsening humanitarian crisis in Nagorno-Karabakh. “The European Union is deeply concerned about the serious humanitarian situation affecting the local population in the former Nagorno-Karabakh Autonomous Oblast,” the EU’s foreign policy chief, Josep Borrell, said in a statement. “The movement through the Lachin corridor remains obstructed for more than seven months, despite Orders by the International Court of Justice to reopen it.”

Inflation in Azerbaijan decreased by 0.9 percent in June 2023 compared to the previous month. According to the Central Bank of Azerbaijan (CBA), in the reporting month inflation amounted to 10.6 percent, down five percentage points from the peak level of recent years, recorded in September last year, and annual food inflation fell to 11.5 percent.

Pakistan inked a framework agreement with Azerbaijan for Liquified Natural Gas (LNG) procurement on flexible terms. The agreement was signed between Pakistan LNG Limited and Azeri Company SOCAR. The tenure of this agreement is one year which is extendable to one more year. Under the agreement, Azerbaijan will offer one Cargo of LNG each month and it will be up to Pakistan to either accept the cargo or not. There will be no financial penalty if Pakistan does not accept the cargo.

Azerbaijan will establish a joint venture with 3 countries for the transfer of green energy from the Caspian Sea to Europe. In Bucharest, Azerbaijan I energy minister signed the MoU with counterparts from Georgia, Romania and Hungary on the establishment of a joint venture between 4 countries for the implementation of the project, which envisages the Green Energy transmission from the Caspian Sea to Europe.

The Central Bank of Azerbaijan (CBA) said it predicts 4-5% growth in the country's gross domestic product (GDP) in 2023-2024, 5-6% in the non-oil sector.

The Board of the Central Bank of Azerbaijan (CBA) has decided on July 26 to keep the discount rate unchanged at 9%. The lower limit of the interest corridor is kept at the level of 7.5%, and the upper one is at the level of 10%. The next decision of the CBA Board on the parameters of the interest corridor will be made on September 20.