ISTANBUL; TURKISH ECONOMY’S ENGINE, ITS DOOR OPENING TO THE WORLD AND CENTER OF FINANCIAL SECTOR. IT IS, AT THE SAME TIME, THE CITY WITH THE ECONOMY HARDEST HIT BY THE PANDEMIC.

Istanbul’s prominent economic sectors, namely tourism, entertainment, logistics, construction, finance, education, healthcare, automotive, and textile, have been hit hard by the pandemic. Furthermore, despite the relief experienced during the summer in the real estate and private consumption areas thanks to the interest rates reduced around 7 percent and the credit expansion, a slowdown reappeared in these sectors due to the interest rates reaching 14 percent in October and November.

As specified by IIA CEO Narin, particular sectors, on the other hand, have been experiencing their golden age. Narin said, “Though most sectors have been affected negatively, some have been going through a golden era. In this sense, in parallel with the changing consumption patterns, sectors such as informatics, e-commerce, personal hygiene, healthcare, and packaged food stand out.”

ECONOMIC RECESSION IN EUROPE AFFECTING ISTANBUL

According to the data of November 2020 reported by the Statistics Office, with $57,7 billion, exports in Istanbul decreased by 12 percent in the first nine months of the year, compared to the same period of the previous year. In the same period, imports increased by 13,1, reaching $89,2 billion. Among Istanbul’s prominent export partners, the German economy is projected to shrink by 6 percent, France by 9,8 percent, Italy 10,6 percent, Spain by 12,8, and the projection on the United Kingdom economic recession is 9,8. This picture poses an obstacle to an increase in demand despite the falling prices of export goods. Underlining Turkey’s economic growth policy based on credit expansion and pointing to the inevitable current deficit, Narin continued:

OURS IS A RESILIENT ANCIENT CITY WHICH HAVING MANAGED TO STAND TALL, SURVIVED COUNTLESS CRISES SUCH AS EPIDEMICS, BATTLES, CONQUERS AND ECONOMIC DEPRESSIONS.

“Credit expansion with low-interest rates resulted in the steady increase in demand for intermediate goods, capital goods, and imports. One needs to rigorously consider the increase in imports exceeding the exports despite the significant devaluation in the Turkish Lira within the year. In such rapid monetary depreciation, only an escalation in exports is expected due to increasingly more affordable lira accompanied by a decrease in imports. Yet we have been going through the exact opposite.”

“INCREASE IN INTEREST RATES MAY HAMPER CREDIT CARD UTILIZATION”

The pandemic altered also the consumption patterns of Istanbul’s inhabitants. The citizens have been going through a period where they tend to use their credit cards more as their income fails to make it till the end of the month.

According to the Statistics Office data, personal credit card expenses increased by 16,3 in Turkey while increasing by 13,9 in Istanbul, where 33,4 of the total personal credit card expenses occur. So do we need to ‘stop’ such spending?

In this regard, Nihat Narin stated that the Central Bank’s increasing monthly interest rates to 1,46 percent from 1,25 percent from the beginning of November might slow down the credit cards usage. As said by Narin, the inclination towards loans and credits usually increases inflation.

“MORE INVESTMENTS NEED TO BE DRAWN TO ISTANBUL RAPIDLY”

Istanbul’s unemployment increased compared to last year due to the shrinking business volume caused by the pandemic and the scarcity of business opportunities. IMM’s Statistics Office reported that the pre-pandemic unemployment rate in Istanbul reached a level that exceeded the country average.

IMM’s STATISTICS OFFICE IS AN EXTREMELY RELIABLE DEPARTMENT FROM WHICH INTERNATIONAL FINANCE ORGANIZATIONS SUCH AS THE WORLD BANK HAVE BEEN BENEFITING.

The rate of broadly defined unemployment reached 17,2 in Istanbul while the rate escalated to 25,1 percent in the 20-24 age group. The number of people hired via ISKUR (Turkish Employment Organization) throughout the normalization process launched in June exceeded 7 thousand people in Istanbul. However, re-escalation of the unemployment figures is quite possible due to the restrictions applied as of November. Narin commented on the city’s unemployment problem: “This growing problem can be solved through swiftly drawing more investments to Istanbul. To this end, the IIA has been conducting negotiations with both local and international investors. We direct the foreign investors looking for employees and contacting us to our Employment Offices. Within this context, we guided a Dutch investor and contributed to employment.”