Strengthening perception softened the market
Half of economics is psychology and perception. The Turkish economy surmounted a serious political and social trauma following July 15 and has proved its strength with support facilitated by the macroeconomic structure; a solid base bolstered through economic reforms and mega projects carried out one after another.
The economic administration has ensured the recovery of Turkey's production performance through proactive measures and ceaseless financial struggle. The end of the Barack Obama era, which has done great harm to Turkey and the region, produced a quick restoration of Turkish-U.S. ties with new U.S. President Trump. What is more, the interest from high level international investors in projects such as the March 18th Çanakkale (Dardanelles) Bridge and the three-story tunnel across Istanbul's Bosporus strait, have improved the global perception on Turkey's economy.
With determined politics and the proactive steps of the Central Bank of the Republic of Turkey (CBRT), the second hand interest rate now stands below 11.2 percent, having measured 11.55 percent on Jan. 11. Also, while the dollar-Turkish lira parity surpassed 3.94 on Jan. 11, it is now quoted below 3.60. Experts expect that the dollar will tumble against the Turkish lira, reaching TL 3.50 if the parity breaks past TL 3.5935.
BlueBay Asset Management's Senior EM Sovereign Strategist Timothy Ash has stated that the exchange rate of the dollar may retract to TL 3.00 if the political stability continues after the referendum. And we had better note down these findings for future reference.
Global arms sales at peak
In last week's column, I discussed whether we were on the edge of a new "Cold War" in terms of global political economy or not. The latest report from the Stockholm International Peace Research Institute (SIPRI) shows that the global import and export of heavy armory has reached its highest level since the Cold War era. From 2012-2016, the arms trade volume increased 8.4 percent compared to the previous five year period. The SIPRI's report reveals that in 2016, heavy arms trade in weapons such as missiles, warplanes, submarines, and air defense systems has reached the highest level since 1990, when the Cold War ended.
Ironically, the five permanent members of the U.N.'s Security Council are the world's biggest arms vendors. It is observed that the U.S., Russia, China, France, and Germany are placed on top of the list in global arms trade in 2016, as 74 percent of the global arms sales are carried out by these five countries.
The share of the U.S. in the global arms trade has reached 33 percent. While the U.S. is followed by Russia with 23 percent globally, China's share in exports seems to be decreasing. Unfortunately, at a time when the sales of arms is on the rise, at least 50 countries stand in serious risk of entering heated conflicts at any moment. The arms sales of the U.S. rose 21 percent, between 2012 and 2016, compared to the previous five years, and we are talking about arms sales to almost 100 countries. Approximately half of the armory produced by the U.S. is sold to Middle Eastern countries.
Naturally, exporters need importers, and the leading buyers of arms in 2016 were Asian and Middle Eastern countries. Saudi Arabia and the United Arab Emirates, who have become embroiled in the Yemeni civil war, stand out as the globes biggest arms during the 2012-2016 period.
NATO countries getting tense
Asian and Oceanic countries have raised their share in global imports to 43 percent by increasing their arm purchases by 7.7 percent. Experts are seriously worried about the rapid increase of arms available in Asian countries, where there is little regional control mechanism in place from international institutions. The purchases from Middle Eastern countries managed the climb to 29 percent of global arms trade with an increase of 86 percent over the last five years. The world's second biggest importer of armory, Saudi Arabia, has increased its purchases by a whopping 212 percent while Qatar's arms import increased 245 percent in the aforementioned five-year period. The United Arab Emirates, China, and Algeria are also among the countries purchasing the most arms. The SIPRI's report points out that Africa's largest arms importing countries are Nigeria, Sudan, and Ethiopia.
India which is also on the list of global arms imports with 13 percent has recorded a 43 percent increase compared to the 2007-2011 period. Interestingly, China's latest focus on local arms manufacturing has resulted in a decrease in its imports, but the country is still among the most important importer countries.
Meanwhile, China's arms exports have risen, especially to Algeria, Pakistan, and Bangladesh. The largest arms importer in Europe, despite the decline over the past five years, is Britain with 22 percent. The fall in Britain's case between 2012 and 2016 also stands out for the whole European continent. Heavy arms import in Europe has shrunk by 36 percent. It is assumed that this decline is influenced by economic pressure, as seen in the examples of Spain and Greece. However, the retreat in investments on defense by the NATO member states of the European Union is highly criticized by the new Donald Trump Administration. A deficiency in Europe's defense may ignite other disputes.
The economic administration has ensured the recovery of Turkey's production performance through proactive measures and ceaseless financial struggle. The end of the Barack Obama era, which has done great harm to Turkey and the region, produced a quick restoration of Turkish-U.S. ties with new U.S. President Trump. What is more, the interest from high level international investors in projects such as the March 18th Çanakkale (Dardanelles) Bridge and the three-story tunnel across Istanbul's Bosporus strait, have improved the global perception on Turkey's economy.
With determined politics and the proactive steps of the Central Bank of the Republic of Turkey (CBRT), the second hand interest rate now stands below 11.2 percent, having measured 11.55 percent on Jan. 11. Also, while the dollar-Turkish lira parity surpassed 3.94 on Jan. 11, it is now quoted below 3.60. Experts expect that the dollar will tumble against the Turkish lira, reaching TL 3.50 if the parity breaks past TL 3.5935.
BlueBay Asset Management's Senior EM Sovereign Strategist Timothy Ash has stated that the exchange rate of the dollar may retract to TL 3.00 if the political stability continues after the referendum. And we had better note down these findings for future reference.
Global arms sales at peak
In last week's column, I discussed whether we were on the edge of a new "Cold War" in terms of global political economy or not. The latest report from the Stockholm International Peace Research Institute (SIPRI) shows that the global import and export of heavy armory has reached its highest level since the Cold War era. From 2012-2016, the arms trade volume increased 8.4 percent compared to the previous five year period. The SIPRI's report reveals that in 2016, heavy arms trade in weapons such as missiles, warplanes, submarines, and air defense systems has reached the highest level since 1990, when the Cold War ended.
Ironically, the five permanent members of the U.N.'s Security Council are the world's biggest arms vendors. It is observed that the U.S., Russia, China, France, and Germany are placed on top of the list in global arms trade in 2016, as 74 percent of the global arms sales are carried out by these five countries.
The share of the U.S. in the global arms trade has reached 33 percent. While the U.S. is followed by Russia with 23 percent globally, China's share in exports seems to be decreasing. Unfortunately, at a time when the sales of arms is on the rise, at least 50 countries stand in serious risk of entering heated conflicts at any moment. The arms sales of the U.S. rose 21 percent, between 2012 and 2016, compared to the previous five years, and we are talking about arms sales to almost 100 countries. Approximately half of the armory produced by the U.S. is sold to Middle Eastern countries.
Naturally, exporters need importers, and the leading buyers of arms in 2016 were Asian and Middle Eastern countries. Saudi Arabia and the United Arab Emirates, who have become embroiled in the Yemeni civil war, stand out as the globes biggest arms during the 2012-2016 period.
NATO countries getting tense
Asian and Oceanic countries have raised their share in global imports to 43 percent by increasing their arm purchases by 7.7 percent. Experts are seriously worried about the rapid increase of arms available in Asian countries, where there is little regional control mechanism in place from international institutions. The purchases from Middle Eastern countries managed the climb to 29 percent of global arms trade with an increase of 86 percent over the last five years. The world's second biggest importer of armory, Saudi Arabia, has increased its purchases by a whopping 212 percent while Qatar's arms import increased 245 percent in the aforementioned five-year period. The United Arab Emirates, China, and Algeria are also among the countries purchasing the most arms. The SIPRI's report points out that Africa's largest arms importing countries are Nigeria, Sudan, and Ethiopia.
India which is also on the list of global arms imports with 13 percent has recorded a 43 percent increase compared to the 2007-2011 period. Interestingly, China's latest focus on local arms manufacturing has resulted in a decrease in its imports, but the country is still among the most important importer countries.
Meanwhile, China's arms exports have risen, especially to Algeria, Pakistan, and Bangladesh. The largest arms importer in Europe, despite the decline over the past five years, is Britain with 22 percent. The fall in Britain's case between 2012 and 2016 also stands out for the whole European continent. Heavy arms import in Europe has shrunk by 36 percent. It is assumed that this decline is influenced by economic pressure, as seen in the examples of Spain and Greece. However, the retreat in investments on defense by the NATO member states of the European Union is highly criticized by the new Donald Trump Administration. A deficiency in Europe's defense may ignite other disputes.