Shift in trade axis starts bearing fruits
Servet Yeşilyurt - ISTANBUL
Investors follow stock exchange information at the Dubai Financial Market on Nov 29 last year. Turkey’s economic drift toward the Gulf countries is gaining steam. REUTERS photoTurkish government’s economic and political approach to the Muslim world in recent years, once triggered heated arguments discussing the axis of the country’s trade and politics shifting from West to East, today leads to become “one of the most promising new economic axes in the world,” according to a recent report by National Commercial Bank (NCB).
Overall Turkish-Gulf Cooperation Council (GCC) trade rose more than tenfold from $1.5 billion in 1999 to $16.1 billion in 2008, according to the report by Saudi Arabia’s largest lender which also owns controlling shares in Türkiye Finans in Turkey.
Total trade volume between Turkey and the GCC countries declined to $7.8 billion in 2009 due to the global financial and economic crisis but recovered to $10 billion in 2010, the “Turkey and the GCC: A Strengthening Relationship” report said.
Launched in 1981, GCC comprises of United Arab Emirates, the kingdoms of Bahrain and Saudi Arabia, Oman, Qatar and Kuwait.
Turkey’s exports hiked 13.2 percent to UAE and 19 percent to Saudi Arabia between January and November 2011 compared with the same period in 2010, according to DEİK (Foreign Economic Relations Board) based on official data. Turkish imports from these two countries, meanwhile, jumped 38 percent and 54 percent respectively in the same period, according to data. The two Gulf countries accounted 86 percent of GCC exports to Turkey in 2010 and an identical share of Turkish imports, the NCB report said.
The prospects for future growth of the bilateral trade volumes are also strong. The trade volume of Turkey and UAE is predicted to increase to $10 billion by 2015 from the current $4.4 billion, according to the report.
Turkish-Saudi trade may reach a sum of $10 billion in two years, the report quotes Turkish authorities as saying. It is a fruitful trade relation especially for Turkey, a country notorious for traditional overall trade balance deficit standing close to $100 billion in 2011, who runs a trade surplus in its commerce with GCC countries.
“Total Turkish imports from the GCC economies in 2010 rose to $3.6 billion, a figure that expanded further to $3.9 billion in January to October 2011. Trade flows in the opposite direction stood at $6.4 billion in 2010, as compared to $5.9 billion in the first ten months of 2011,” said the report.
“The Arab Spring seems to have redirected a number of Gulf investors from other Arab countries to Turkey,” according to the report. The total value of GCC foreign direct investment flows into Turkey reached $6.5 billion in the period from 2004 to August 2011 whereas foreign direct investment in the opposite direction totaled only $305 million, the report said.
Crisis the turning point
Arabian Gulf countries registered significant losses on their investments in the West during the financial crisis, which erupted in 2008 in U.S. and they started shifting their investments to emerging markets in 2009, said Ali Bayramoğlu, co-head of the Turkish-Saudi Business Council, adding that Turkey was one of them.
“Even if Europe starts to recover in the short term, which I doubt, I believe they have made up their mind on investing in Turkey,” Bayramoğlu told the Daily News in a phone interview yesterday.
“There is this issue of lifting the principle of reciprocity and let foreign investors acquire property in Turkey. The other point is to ensure the foreign investors, they will not have problems regarding return on their investments,” said Bayramoğlu. “Turkey has a somewhat fragile economy. It is especially important for the foreign investors not to worry about exchange rate risks.”