Macro Monday 55 - European gateway to M.East & Russia Macro Monday 55
Turkey - Europe’s gateway to the Middle East and Russia
Turkey holds a vital strategic position as the bridge between Europe and the Middle East.
Turkey’s economy has been making leaps and bounds over the past decade and the war in Ukraine has resulted in significant increase in trade through the country, benefiting its logistic companies and economic status. As one of the main corridors from Europe to the Middle East and beyond, let’s see what this blossoming trade Centre can offer us.
Russia’s Trade Enabler
Turkey has become a crucial transit point for Russian goods, especially since the war. Its strategic location at the crossroads of Europe and Asia allows it to facilitate trade routes between all these regions. As a result, Russian produce has increasingly passed through Turkey, benefiting both countries economically, and indirectly benefitting Europe.
In June 2023, Turkey’s exports to Russia increased by 23.9%, reaching $848.4 million—a substantial surge compared to the previous year’s figure of $684.9 million. Moreover, during the first half of the year (January to June), Turkey’s exports to Russia more than doubled, reaching $4.9 billion compared to last year’s $2.6 billion. Despite a decline in imports, Russia remains Turkey’s largest trading partner in terms of goods purchased. Russia’s favor to Turkey during the currency crisis, including postponing a natural gas debt and recognizing Turkey as a reliable gas route to Europe, has further strengthened their economic ties
Robust GDP Growth
Turkey’s GDP expanded by 4.5% in 2023, driven by strong private consumption, increased investment, and government spending. Additionally, in 2021, Turkey achieved an impressive 11% annual GDP growth, making it the fastest-growing economy globally for the 2021 year. For the 2024 year a GDP growth rate of between 2.9% and 4% is expected depending on the authority advising. Amazingly, according to Trading Economics, the GDP annual growth rate in the first quarter of 2024 was 5.7%, a significant acceleration from the previous quarter. On a seasonally adjusted quarterly basis, the GDP rose by 2.4% in Q1.
Demographics
With a population of 85.8 million, Turkey has a sizable labor force and a young demographic profile. As of 2023, the median age of the Turkish population is 34 years, up from 28.3 in 2007. This youthful demographic profile contributes to productivity and economic dynamism.
Produce and Exports
Turkey’s top exports include refined petroleum oils, cars, jewelry, automotive parts, and trucks. Turkey has a complex and varied array of produce that contribute significantly to its versatile economy. Turkeys produce and exports are so diverse that they don’t appear to be a global leader in any one item, however In 2023, Turkey exported $12.3 billion worth of Refined Petroleum, making it the 24th largest exporter of this product globally. Refined Petroleum accounted for 12.1% of Turkeys total exports.
Poverty Reduction
Rapid economic growth has led to substantial poverty reduction. The poverty rate decreased from above 20% in 2007 to 7.6% in 2021.
Investment Climate
Turkey’s business-friendly environment attracts foreign direct investment (FDI). It offers incentives, a skilled workforce, and access to diverse markets. We can see that it has even bolstered relations with Russia and Europe during their conflict, being a go between, between the two.
Tourism
Tourism plays a crucial role, with Turkey being a popular destination for travelers and medical tourism. Turkey’s efforts to enhance its healthcare sector have positioned it as a prominent player in European medical tourism and now other continents are starting to travel here for affordable medical procedures.
Resilience and Adaptation
Despite challenges, Turkey continues to adapt to global economic shifts, such as the EU’s Carbon Border Adjustment Mechanism, emphasizing sustainability and resilience.
The Chart
NASDAQ TURKEY Index - NASDAQ:NQTR
The NASDAQ Turkey Index is a float adjusted market capitalization-weighted index designed to track the performance of securities assigned to Turkey
Subject chart
- The chart speaks for itself.
- We have broken out of long term downtrend and have a great trading opportunity with a 6:1 reward to risk when looking for a bounce from support.
And that’s it for this week folks, we have the wind at our backs for the above trade and its worth reviewing logistic companies in Turkey. We will be looking out for them here. The liked of Reysas Lojistic - BIST:RYSAS has been on an absolute tear.
All these charts are available on my TradingView Page and you can go to them at any stage over the next few years press play and you'll get the chart updated with the easy visual guide to see how Turkey market is performing.
I hope its helpful.
PUKA
