Prior to President Recep Tayyip Erdoğan's visit to the Indian capital of New Delhi, scheduled from April 30 to May 1, we, the Sabah Columnists Club, are in New Delhi to hold a series of meetings with India's leading think tanks, research centers and media groups. Maintaining its goal of climbing to the top of the world economy, India is expected to advance to third place by 2030 and to second by 2050 on the basis of the purchasing power parity. Despite investments and private sector dynamism, which are actualized for the sake of national development, the country is seeking ways to accelerate its development for its 300 million people who currently live below the poverty line. Upon arrival, we met with the Foreign Correspondents Club of South Asia's (FCC) foreign policy correspondents and held a panel discussion at India's International Chamber of Commerce (ICC), along with meetings with the Indian business world and media representatives ongoing since yesterday.
While tackling tough questions concerning a variety of issues, from the Syrian crisis to Turkey's period of new relations with Russia, China and India, during the meetings, we expanded on Turkey's successful economic transformation over the past 15 years, how it boosted its growth performance and its success stories in many areas, including health and local administrations. Cooperation opportunities between Turkey and India in the areas of energy, renewable energy, transportation, communication, information technologies and financial services were also discussed. We noted that China and Russia are gaining ground in the Turkish banking sector with their global-scale banks, suggesting that Indian banks should also have a presence in the Turkish market. In addition, we conveyed important opportunities that could be shared in the field of infrastructure investments between Turkey and India and explained the mega projects of Turkey in detail.
Indian journalists and academics asked questions about the income distribution and social structure in Turkey. We answered by explaining that Turkey has achieved its best recovery in income distribution equality in 30 years, according to the Organization for Economic Co-operation and Development (OECD) report. We also outlined the country's historic success in health reforms and the level it has reached in local government services. It appears that there are critical opportunities in India that highlight our historic success in the health sector and our global success in local government services. As a result, we already feel that Erdoğan's visit to New Delhi will be successful in this respect.
Global markets eye French
election results and
Trump's tax package
Following the April 16 referendum, economic circles have started focusing on major economic topics resulting from the decreasing developments in the political arena. As the distribution of votes in the first round of the French presidential elections has strengthened the possibility of France remaining in the EU, the euro has appreciated against the dollar. The French elections have strengthened the positive atmosphere in European markets and the tension in Turkey has lessened - which has had a positive impact on foreign exchange rates and the Borsa Istanbul Stock Exchange (BİST).
Meanwhile, this week's two critical issues regarding the U.S. dollar are: President Donald Trump's new tax package and the U.S.'s growth data for the first quarter. American economy circles think that Trump may want to create an impression through the new tax package in an attempt to fulfill his election promises, given that he has not offered up a good performance so far.
Trump's official package will reduce corporate tax to 15 percent from 35 percent. The average tax rate paid by S&P 500 companies is 29 percent. According to Trump's new plan, the number of individual income tax brackets would shrink from seven to three - 10, 25 and 35 percent. Currently, the individual income tax is applied at seven different levels in the U.S. - 10, 15, 25, 28, 33, 35 and 39.6 percent. In addition, profits from overseas will be subject to a one-time tax. According to the new tax plan, companies will not be subject to taxation if they bring their overseas profits to a regional taxation system where foreign profits are mostly exempt from U.S. taxes. In the current situation, the U.S. imposes taxes on corporations no matter where their profits are earned.
Considering Trump's previous performance, some think that the package will not fulfill expectations. Trump's steps to reduce tax revenues and to increase public infrastructure investments and public spending will undoubtedly have a negative effect on U.S. budget performance and trigger inflation. This may force the Federal Reserve (Fed) to take steps to further tighten its monetary policy. For this reason, Trump's economic steps, the supportive steps for small and medium size enterprises (SMEs), in particular, and the possible contradictions in the Fed's policies will be followed carefully. Also, Trump's 24 percent surcharge on timber imported from Canada has not gone unnoticed. Meanwhile, the U.S. federal government funding expired on April 28 and Congress needs to form a new budget. If Trump's demand for allocation on building a "wall on the border with Mexico" preoccupies Congress, the federal government may be closed for lack of appropriation. As you read this article over the weekend, the federal government will either have shut down, or Republicans will have passed the federal budget, including the allocation for the "Mexican wall."