Turkey emerges from COVID-19-hit 2020 with 1.8% economic growth

Turkey emerges from COVID-19-hit 2020 with 1.8% economic growth
Propelled by a burst of credit in mid-2020, fourth-quarter GDP grew 1.7 percent from the previous quarter on a seasonally and calendar-adjusted basis. (File/AFP)
Short Url
Updated 01 March 2021

Turkey emerges from COVID-19-hit 2020 with 1.8% economic growth

Turkey emerges from COVID-19-hit 2020 with 1.8% economic growth
  • The cheap lending accelerated a record drop in the lira, drew down the country’s foreign currency reserves and helped push inflation to 15 percent

ISTANBUL: Turkey’s economy grew 5.9 percent in the fourth quarter and 1.8 percent in 2020 as a whole, annual data showed on Monday, emerging as one of only a few globally to avoid a contraction due to the coronavirus pandemic.
Propelled by a burst of credit in mid-2020, fourth-quarter GDP grew 1.7 percent from the previous quarter on a seasonally and calendar-adjusted basis, the Turkish Statistical Institute said.
A surge in gross domestic product (GDP) growth in the second half of the year that surpassed Turkey’s potential rate was driven by a near doubling of lending by state banks to face down the initial wave of the virus.
While outperforming all emerging market (EM) and G20 peers except China, Turkey’s growth came at a price: The cheap lending accelerated a record drop in the lira, drew down the country’s foreign currency reserves and helped push inflation to 15 percent. Also, few jobs were created.
The recovery was “unbalanced and ultimately exacerbated some of the country’s external vulnerabilities,” said Jason Tuvey, senior EM economist at Capital Economics.
Financial sector activity surged more than 21 percent last year, driving overall growth, the data showed. Tourism and other services activity dropped by 4.3% and the construction sector, an engine of growth in years past, shrank 3.5 percent.
The lira firmed to 7.351 against the dollar after the GDP data and was 1 percent stronger on the day.
The volatile currency tumbled last week after a rally that began in early November when Turkish President Tayyip Erdogan promised a new market-friendly economic era. A new central bank chief has since hiked interest rates, cutting credit dramatically.
Finance Minister Lutfi Elvan, appointed in November, said on Twitter Monday that Turkey would prioritize price stability this year. Analysts say the economy should expand by roughly 5 percent in 2021 despite tight monetary policy.
In a Reuters poll, GDP was forecast to have expanded 7.1 percent year-on-year in the fourth quarter of 2020, despite new curfews and curbs on the service sector to address a second COVID-19 wave, and 2.3 percent for the whole year.
World economies mostly contracted and tumbled into recessions last year, with emerging and developing nations shrinking by some 2.4 percent according to the International Monetary Fund.
The major EM economy has cooled in recent years from an average 5 percent growth rate in the last two decades. The rate plunged by 10.3% annually in the second quarter as the pandemic bit, but rebounded sharply by 6.3 percent in the third.
Ankara is considering lifting some of the latest virus restrictions as of this month.
Tuvey of Capital Economics said the shift in November to more orthodox policies helped Turkey avoid “a full-blown balance of payments crisis,” and he predicted a sustained recovery may not come until the second half of this year.


World’s first fully Islamic Shariah-compliant digital bank launched in UAE

World’s first fully Islamic Shariah-compliant digital bank launched in UAE
Updated 47 min 10 sec ago

World’s first fully Islamic Shariah-compliant digital bank launched in UAE

World’s first fully Islamic Shariah-compliant digital bank launched in UAE
  • Long-term, the lender aims to scale up operations worldwide via strategic partnerships with banks and financial institutions

DUBAI: The UAE is set to be home to the world’s first fully Islamic Shariah-compliant digital bank, it was announced on Wednesday.

Set up by Zurich Capital Funds Group and branded as RIZQ / BARAKA, the new lender will provide all banking services according to Islamic law.

It will operate all digital banking services through mobile phones and computers, and its app can be downloaded via Apple Store, Google Play (Android stores), and many communication sites and social media networks.

RIZQ / BARAKA is launched from the UAE but aims to target customers in the Middle East and North Africa.

Long-term, the lender aims to scale up operations worldwide via strategic partnerships with banks and financial institutions in India, Azerbaijan, Uzbekistan, Indonesia, Malaysia, the UK, Australia, Brazil and Mauritania.

Dr. Fahed Al-Merhebi, chairman of Zurich Capital Funds Group, said the bank is the latest in its digital ambitions, having already launched a Shariah-compliant digital crypto exchange platform called the SUSTAIN EXCHANGE, and a range of sports digital currencies that were listed on the exchange.

Earlier this month, Dubai businessman Mohamed Alabbar announced that he is to lead a new digital bank set to be launched soon in the UAE.

Zand is being billed as “the world’s first combined digital corporate and retail bank,” and is going through final approvals ahead of its launch.

Alabbar, founder of Emaar Properties — the Dubai developer behind The Dubai Mall and Burj Khalifa — teamed up with Saudi Arabia’s Public Investment Fund to launch the Noon online shopping platform in 2017. He will take on the role of chairman of Zand.

“The UAE combines progressive regulations with commercial, financial, and technology hubs. This provides the perfect environment for a world-leading digital bank that can launch in the UAE and scale beyond,” Alabbar said.

“As the first fully independent digital bank in the country, with a full UAE banking license, Zand will provide innovative, effective financial solutions that help simplify businesses and lives, addressing the needs of both retail and corporate customers.”

Online banking has become increasingly popular in the UAE. In a survey by the Boston Consulting Group (BCG) last October, 70 percent of respondents said they are actively searching for a new bank, and 87 percent said they would be willing to open an account with a branchless digital-only lender.


Dubai to build Gulf’s first blockchain-backed precious metals refinery

Dubai to build Gulf’s first blockchain-backed precious metals refinery
Updated 21 April 2021

Dubai to build Gulf’s first blockchain-backed precious metals refinery

Dubai to build Gulf’s first blockchain-backed precious metals refinery
  • The facility will refine and store precious metals including gold, silver, platinum, palladium and rhodium

DUBAI: The Dubai Multi Commodities Centre (DMCC), a free zone authority in the emirate, has completed a deal that involved plans for a precious metals refinery and storage facility enabled by blockchain technology – the first in the region.
The facility will refine and store precious metals including gold, silver, platinum, palladium and rhodium, which will be tokenized on goldexchange.com, a secure trading platform, it said in a statement.
“Blockchain technology can enable more transparent and accurate tracking of precious metals, ensuring there is no ‘dirty gold’ in circulation and illicit trades,” REIT Development CEO Mike De Vries said.
REIT Development acquired industrial land in DMCC’s Jumeirah Lake Towers, where the 100,000 square feet facility will be built and is expected to open in the last quarter of 2022.
The facility will create a decentralized record of all transactions, making it possible to track all precious metals that are refined and eventually sold to over 150 countries.


Saudi trade name requests jump amid signs of FDI rebound

Saudi trade name requests jump amid signs of FDI rebound
Updated 21 April 2021

Saudi trade name requests jump amid signs of FDI rebound

Saudi trade name requests jump amid signs of FDI rebound
  • Requests for trade names increased by 19 percent in the first quarter of 2021

RIYADH: Saudi commercial chiefs have reported a rise in trade name requests, the latest indicator of a rebound in business activity in the Kingdom.
Requests for trade names increased by 19 percent in the first quarter of 2021, compared to a year earlier, SPA reported.
The Ministry of Commerce received 78,056 requests for trade names in the first quarter of 2021, compared to 65,716 requests a year earlier.
Most of the applications were for restaurants, cafés, contracting and foodstuffs activities — an encouraging sign from sectors that have been especially hit hard by the pandemic.
The rollout of vaccines across the Gulf states is helping businesses in some sectors get back to normal, however continued travel restrictions and the resurgence of the COVID-19 coronavirus in countries such as India has tempered earlier expectations of a strong and swift global recovery.
Still, there are also sign of rebounding foreign direct investment activity.
Sovereign AEI, a company that assists foreign investors establish a presence in the country, has also reported an increase in activity and expects to record a 50 percent rise in registrations at the Ministry of Investment of Saudi Arabia this year.
“The Saudi market presents tremendous opportunities,” said Paul Arnold, managing director of Sovereign Saudi Arabia. “We continue to see a growing interest and increasing shift of client focus toward KSA, as the country continues to unveil new strategic initiatives.”
The Kingdom has accelerated efforts to attract foreign investment this year as the pandemic created new challenges for regional economies seeking to diversify, modernize and create jobs for citizens.
In February the government announced it would stop signing contracts with foreign companies from 2024 unless their regional headquarters were based in the Kingdom.


UAE overtakes China in $17bn US treasuries purchase

UAE overtakes China in $17bn US treasuries purchase
Updated 21 April 2021

UAE overtakes China in $17bn US treasuries purchase

UAE overtakes China in $17bn US treasuries purchase
  • China bought $9 billion of treasuries in February
  • Monthly haul was biggest ever for UAE

RIYADH: The UAE bought more US treasuries than China in February, breaking with other top oil exporters in the Arabian Gulf that cut back on their exposure to one of the world’s safest assets, Bloomberg reported.
OPEC’s third-biggest producer raised its stockpile by almost 50 percent to $50.6 billion at the end of February, an increase of nearly $17 billion that made it the second-biggest buyer of the securities that month after the UK, according to the latest figures from the US Treasury Department.
The monthly haul was the biggest ever for the UAE, with no clear reasons.
The UAE may have built up enough of a buffer to commit the spare petrodollars toward the $21 trillion treasuries market, Bloomberg said.
The move took UAE holdings to levels last seen in 2019 before the global pandemic and the crash in oil prices put pressure on its finances. China bought $9 billion of treasuries in February to bring its total to $1.1 trillion, the highest since mid-2019.
Both Saudi Arabia and Kuwait were net sellers of treasuries in February.


Erdogan replaces Turkish trade minister, forms two new ministries

Erdogan replaces Turkish trade minister, forms two new ministries
Updated 21 April 2021

Erdogan replaces Turkish trade minister, forms two new ministries

Erdogan replaces Turkish trade minister, forms two new ministries
  • In a presidential decree Ruhsar Pekcan was replaced as trade minister by Mus, who has been a lawmaker for Erdogan’s AK Party since 2011

ISTANBUL: President Tayyip Erdogan appointed a prominent member of Turkey’s ruling AK Party, Mehmet Mus, as trade minister on Wednesday and split the Family, Labour and Social Policies Ministry into two ministries.
In a presidential decree Ruhsar Pekcan was replaced as trade minister by Mus, who has been a lawmaker for Erdogan’s AK Party since 2011 and served as the party’s deputy chairman in charge of the economy.
The decree, published in the Official Gazette, gave no reason for the change, but it comes after opposition politicians accused Pekcan’s ministry of buying supplies from her family-owned company and called on her to resign.
The Trade Ministry confirmed that the purchase of sanitisers had been made, but said in a statement on Tuesday the choice was based on price alone and not due to “the name of the company making the sale.”
It said that the sale, worth some 500,000 lira ($62,000), had been carried out in line with relevant regulations.
Erdogan’s overnight changes come amid speculation over a wider cabinet reshuffle, after he changed the country’s top economic management in November, including the central bank governor.
The president established two new ministries by splitting the Family, Labour and Social Policies Ministry into two separate ministries, according to the decree.
He appointed Derya Yanik as Family and Social Policies Minister and Vedat Bilgin as the Labour and Social Security Minister, replacing Zehra Zumrut Selcuk.