Maybe the turkish president Abdullah Gül would have preferred to stay in Istanbul at such a delicate moment for his country, but reconnecting with one of his most important trading partners, such as Italy, was just as important. After all, in his this week's visit to Rome, where he met the president Napolitano and the premier Read, did not fail to underline the need and urgency of the concrete support of our country and of the EU as a whole in the face of an economic and currency crisis which could undermine the foundations of the long growth of recent years in the country that marks the border between Europe and the Middle East.
In fact, the last few weeks have not been very happy, and it certainly cannot be said that the prospects for 2014 are all positive. Swooping stock market, Turkish lira in continuous decline, government reshuffle in December (as many as 10 ministers were replaced due to various scandals), balance of payments difficulties, growth prospects revised downwards (even if for the government it will remain at 4% ), social tensions and street clashes: an explosive mix that undermined confidence in an endless boom – like that of the countries of the Far East – in which Turkey has been cradling itself lately.
The international rating agencies have for the time being kept their judgments on country risk unchanged: at the minimum level of the category "investment grade” for Moody's (Baa3) and Fitch (BBB-), at the maximum level of the speculative category for Standard & Poor's (BB+). Even if the "lords of the ratings" continue to have faith in the liveliness and diversification of the Turkish economy, they do not deny fears about the effects that could be caused by the expected Tapering by the US monetary authorities, ie the increase in interest rates, especially in emerging countries, for the planned reduction of quantitative easing (the injection of liquidity into the economy for banks and companies).
Already in recent days the devaluation record of the lira pushed the Turkish Central Bank (BCT) to raise interest rates, bringing them to 12% in the market overnight, up 425 basis points from 7,75% established during the previous week. Rates are also on the rise overnight on deposits with the BCT (to 8% from 3,5%) and one-week repurchase agreements, to 10% from 4,5%. After the intervention of the BCT, the lira appreciated by more than 3%, but this does not change much the strong downward trend of the currency (yesterday at 3,05 against the EUR and 2,26 against the dollar), demonstrated by the graph below at the start.
This situation re-proposes the usual problem of devaluations, which, even if they improve the competitiveness of exports, always involve a run-up to devaluation – interest rate hikes – inflation – current account deficit – new devaluation, especially in countries with heavy imports of hydrocarbons, which buy oil and gas by paying for them in revalued dollars. Italy knows something of this perverse spiral at the time of our lira (even if some scrambled demagogues, surrounded by second-class economists, show that they no longer remember it).
Indeed, despite the devaluation of the Turkish lira, the Turkish current account deficit for 2013 is estimated to be close to 7% of GDP. Imports increased above all due to the energy component and consumer goods. The deficit was partly offset by foreign capital inflows (albeit declining in 2013). In particular, 2013 saw a slowdown in exports to countries such as Iraq, Libya and Egypt, and a reduction in gold exports to Iran (“gas for gold”).
According to SACE data (see Türkiye country file), Italy it is Turkey's fifth largest trading partner. In 2012 imports from Turkey amounted to EUR 5,3 billion (-12% compared to the previous year), while Italian exports to the country reached EUR 10,6 billion (+10%), making Turkey the seventh outlet market for Italian goods and the first among the emerging countries. The products most exported to the Turkish market are mechanical engineering (22,9% of total exports), refined energy products (19,4%), means of transport (10,9%). In the first six months of 2013, Italian exports contracted by 3,8% compared to the same period of 2012, while imports from Turkey grew by 8,1%, amounting respectively to approximately EUR 5 billion and EUR 2,9, XNUMX billion. For the whole 2013 is estimated one positive bilateral trade balance of more than 4 billion. In addition to exports, the Italian IDEs which place our country ai first place among foreign investors: their flow showed constant growth in 2011 and 2012, with over 1000 companies and firms with Italian participation present in the Anatolian country. 2013 should end with a drop in them, while maintaining Italy's leading position in this area. Between the sectors that offer the greatest opportunities, the manufacturing, agricultural, transport, oil and hospital sectors stand out, enjoying tax and customs incentives. Further opportunities are present in the construction sector (residential and tourist), infrastructure and energy (the country imports more than 90% of its needs).
Despite the difficulties seen above, I believe that Italian exporters and investors must look at Turkey with some caution yes, but also with optimism, for 3 reasons: the first is that the Türkiye's march towards the EU it will be slow, but it is destined to end positively; the second is that the country and its major banks have gone through many times even more difficult than the present in the last 30 years, but - also thanks to its strategic geopolitical position - they have always come out of it without defaults; the third is that SACE's attitude towards Turkey is cautious, but totally open both for sovereign risk and for banking and corporate risk.
As the president Giovanni Castellaneta in his speech at the Matching Italy - Turkey in the week (attached here), SACE has been present in Turkey since June 2010 with a Representative Office in Istanbul and also competent for the neighboring countries of the Middle East. In the country it counts on a portfolio of commitments amounting to 1,9 billion, mainly concentrated in the sectors oil & gas, metallurgical, chemical ed automotive. An exhibition that makes Türkiye is the second emerging market (after Russia) in SACE's portfolio.
After approving around 700 million euros of new guarantees in 2013, SACE is currently studying new projects for over 1 billion. The prominence of SMEs is growing in this market. Supplier credit transactions, especially dedicated to the small and medium-sized business segment, were the most numerous in 2013.
Optimism tells us that our exporters and investments must continue to monitor their operations in Turkeydespite the current difficulties. There caution it means that however, especially against counterparts that are not well known, the export operations must be carried out with secure payment instruments (confirmed or insured documentary credits, credit instruments to be released with forfeiting operations or SACE policy transfer, medium-long term bank credit lines), or otherwise must be insured by SACE or other insurance companies present in our market in this sector; The investments, which have a long-term return, must be insured with the policies is SACE makes available to our companies for these purposes.
Attachments: 20140130-Pres. SACE Castellaneta -Matching-Turkey.pdf
