Dr. Mehmet Muş, Minister of Commerce of the Republic of Türkiye Global Economy and Türkiye
Dr. Mehmet Muş Minister of Commerce of the Republic of Türkiye Global Economy and Türkiye on Mutual Growth Potential with UAE
In recent years, the world economy has gone through a difficult period. Trade protectionism, political tensions and the Covid-19 pandemic have shaken global momentum and created uncertainty in global trade. In this period, conventional rules and practices were again challenged in many aspects. As the global economy healed its wounds in 2021, Turkey stands out positively for its great commercial and economic success.
Over the past year, as we move towards the centenary of our Republic, Turkey has reached record highs for some economic indicators, mainly by taking effective precautions for the smooth running of economic activity and by transforming disruptions in global value chains into benefits. Turkey’s economy, which grew by 22% in the second quarter of 2021, continued its performance of balanced and inclusive growth in the third quarter of the year by growing by 7.4%. As a result, Turkey’s growth expectations have risen to 11% for 2021. These figures confirm that Turkey has stood out from other G20 countries as the country that will make the fastest recovery during the pandemic.
As is known, world trade volume contracted by 5.3% in 2020 and is expected to increase by 10.8% and 4.7% in 2021 and 2022, respectively. Turkey, which considers exports as one of the main drivers of its economy, far exceeded these expectations in 2021 thanks to its historical performance in foreign trade. Turkey’s exports, for the first time in history, topped $200 billion and jumped to $225 billion growing by 32.9% in 2021. By comparison, our exports, which only were only from 36 billion US dollars in 2002, almost sixfold by 2021. Our foreign trade volume, on the other hand, has been realized at 496.7 billion US dollars, while our foreign trade deficit has also maintained its downward trend in 2021. In addition, the export/import coverage ratio reached 83.1% increasing by 5.8 points. compared to the previous year.
In addition to the historical figures for trade in goods in 2021, the good performance of trade in services is also worth highlighting. As Türkiye, we have achieved a strong recovery in our services exports reaching $53 billion with an increase of 60% compared to 2020. In the medium term, we aim to increase our current services exports to $100 billion. dollars.
The above mentioned success of Türkiye stems from the constructive interaction with its neighbors. In this regard, I would like to emphasize that Turkey attaches great importance to its strategic and economic partnership with the Gulf region. In this regard, our entrepreneurs have joint efforts to constantly expand their trade and economic relations.
Bilateral trade and economic relations
We are on the eve of a new era in Turkey-UAE relations. The best indicator of this is the visit of His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the United Arab Emirates Armed Forces to Turkey on November 24, 2021. During this visit, HE the President Recep Tayyip Erdoğan and His Majesty Al Nahyan had very fruitful meetings. Prior to the Crown Prince’s visit, on 22-23 November 2021, I traveled to the United Arab Emirates with my delegation for the 10th session of the Joint Economic Commission (JEC) meeting held after the four-year interval. On the sidelines of this occasion, a Business Council meeting also took place and I had the chance to visit Expo 2020 Dubai.
I believe that both countries should endeavor to encourage their respective companies and organizations to increase their participation in exhibitions, fairs and other promotional activities held in both countries. In this vein, Expo 2020 Dubai is a remarkably important tool to realize these efforts.
The United Arab Emirates is one of Turkey’s main trading partners in the region. As the scale and complementarity of our economies continue to grow, there will surely be even greater potential for our mutually beneficial cooperation to be tapped. Unfortunately, bilateral trade flows have followed a fluctuating course in recent years. Our trade volume, which was around $15 billion in 2017, unfortunately dropped to $7.9 billion in 2021. I think these numbers are far from reflecting the potential between our countries. We should strive to eliminate the barriers faced by the business community in order to improve bilateral trade and economic relations.
While diversifying areas of cooperation to improve our trade ties; an important point that must be taken into consideration is the mutual investments between two countries. Currently, 538 UAE companies are operating in Turkey with an investment of $4.9 billion. On the other hand, Turkish investments in the United Arab Emirates have reached nearly one billion dollars.
Lately, as an important indicator of our strong cooperation, the United Arab Emirates has undertaken to allocate a fund of 10 billion dollars for investments in Turkey, in various strategic sectors such as energy, petrochemicals, technology , transport, infrastructure, health, financial services, food and agriculture. .
Given Türkiye’s strengths such as its unique geographical location, proximity to local and regional markets, coupled with an extensive network of free trade agreements, a skilled workforce, well-developed infrastructure and legislation liberal in foreign investment, we hope to attract more and more Emirati investors in the coming years. I firmly believe that strengthening our bilateral investment relations will also contribute to deepening economic and trade relations.
Similarly, construction is another important segment of our business relationships. So far, Turkish construction companies operating in the UAE have undertaken 141 projects with a total value of $12.6 billion. Our contracting companies have carried out many prestigious projects in various countries around the world. In this regard, I firmly believe that our cooperation in this area will increasingly continue.
Along with the growing trend of bilateral trade and economic relations between Turkey and the United Arab Emirates, the Central Bank of the Republic of Turkey and the Central Bank of the United Arab Emirates announced the establishment of a bilateral exchange agreement currency between the Turkish lira (TRY) and the United Arab Emirates dirham. (EDA). The nominal size of this swap agreement is mutually TRY 64 billion and Dh 18 billion.
The agreement, which aims to promote bilateral trade with the aim of further strengthening financial cooperation between the two countries, will have a duration of three years, with the possibility of extension. This reflects our desire to strengthen bilateral cooperation in financial matters and demonstrates the commitment of the two central banks to deepen bilateral trade in local currencies in order to strengthen economic and financial relations between our countries.
In line with Türkiye’s goal of carbon neutrality by 2053, we released the Turkish Green Deal Action Plan in July 2021 to support our economy’s transition to a green and resource-efficient economy.
We are also following the UAE’s “Energy Strategy 2050”, which aims to increase the contribution of clean energy in the total energy mix from 25% to 50% by 2050 and reduce the carbon footprint of production. 70% electricity.
I believe that green transformation efforts in our countries will create new areas of cooperation for our businesses. In this regard, our companies’ joint investments in green sectors will have enormous potential to contribute to the continued green growth of both countries.
As Minister of Commerce of the Republic of Turkey, I am very happy to see that our countries are significantly stepping up efforts for further cooperation in all dimensions of economy, finance and trade.
Considering that Turkey and the UAE are important players contributing to the stabilization of our region, deepening our cooperation will not only serve the interest of our nations, but also lead to prosperity and well-being. from the Middle-East.