Turkey’s Economic Brief – 17.02.2017

1. Sovereign Wealth Fund

Recently the Turkish government transferred a number of its assets from different organizations to a new sovereign-wealth fund. The fund is created to finance large infrastructure projects such as bridges, airports, seaports, roads, and so on. Before I get into that I will quickly go over what a Sovereign-wealth fund is for the viewers who are unaware.

A sovereign-wealth fund is an investment fund, which is controlled by the government in order to finance different development projects, to protect surplus revenues, and to generate profits, which can be used for the economy. It also stabilizes a country’s economy through diversification and generates wealth. It is also nothing new, the first sovereign-wealth fund was created in 1953 and the total worth of wealth funds around the globe exceeded $5 trillion in 2012.

Some of the Sovereign Wealth Funds around the world include:

• Government Pension Fund of Norway
  • $885 billion
• China has a few large Sovereign Wealth Funds
  • China Investment Corporation – $813.8 billion
  • SAFE Investment Company – $474 billion
• UAE also has a few large SWFs
  • Abu Dhabi Investment Authority – $792 billion

Back to Turkey. Of course, Turkey’s sovereign-wealth fund will not be as large as some I listed earlier but it will be used for development projects. A large number of assets from organizations such as Ziraat Bank, Borsa Istanbul (which controls the Istanbul stock exchange), and Turkish Airlines among many others to have contributed to this fund. The fund will make it easier for the government to finance large infrastructure projects as they will have control over it and will have a direct financing option.

2. Increase in Lending

Turkish EXIM bank announced that they plan on providing $40 billion in loans and insurance to more than 100,000 companies. Last year a total of $33 billion was provided, which is set to increase this year. This should further help the exports from Turkey as more loans will be available for export companies.  In an earlier video I discussed the increased exports in January and with plans such as these, I am hopeful that the exports would further increase.

3. New Startups in January

The Turkish Union of Chamber and Commodity Exchanges released the data for companies established in January 2017. There were a little over 6,200 companies established in the month of January as compared to 6,835 established in the same month last year. Out of these, 359 companies were established with foreign partners. 143 or almost 40% of all firms established with foreign partners had Syrian partners. The number of firms established with Syrian partners has also dropped since last January in which 219 firms were established. The number of firms established with Syrian partners has been increasing since 2011, the beginning of the Syrian crisis. In total, over 5000 firms have been established with Syrian partners since 2011. I will be making a separate video about the Syrian situation in Turkey where over 2.8 million Syrian refugees are registered. In that video I will focus on the integration of Syrians in Turkey and what steps have been taken and how we can move forward and speed up this process.

That’s it for this week. I have decided to change Turkey’s economic brief from every week to every other week. So, I’ll be here in the first week of March to summarize the events in February. If you have any questions please don’t hesitate to ask. Have a great weekend.