A Well-Brewed Partnership

Dr. Mehmet Muş Minister of Trade of the Republic of Türkiye Global Economy and Türkiye on mutual growth potential with the UAE

In recent years, the global economy has gone through a difficult period. Trade protectionism, political tensions and the Covid-19 pandemic have shaken global dynamics and created uncertainty in global trade. In this period, the conventional rules and practices have been once again questioned from numerous aspects. While the global economy was healing its wounds in 2021, Türkiye positively stands out with its great success in terms of trade and economy.

In the past year, as we march to the centenary of our Republic, Türkiye has hit its record highs in certain economic indicators mainly by taking effective precautions for the smooth operation of economic activity and turning disruptions in global value chains into advantages. Turkish economy, which grew by 22 per cent in the second quarter of 2021, continued its balanced and inclusive growth performance in the third quarter of the year by growing 7.4 per cent. Accordingly, Türkiye’s growth expectation has increased to 11 per cent for 2021. These figures confirm that Türkiye has stood other G20 countries out as being the country which will perform the fastest recovery during the pandemic.

As it is known, the global trade volume contracted by 5.3% in 2020 and is expected to grow by 10.8 per cent and 4.7 per cent in 2021 and 2022, respectively. Türkiye, which considers exports as one of the major driving forces for its economy, significantly surpassed these expectations in 2021 thanks to its historic performance in foreign trade. Türkiye’s exports, for the first time in history, exceeded $200 billion dollars and surged to $225 billion dollars by rising 32.9 per cent in 2021. For the sake of comparison, our exports, which were just 36 billion U.S. dollars in 2002, have nearly sextupled by 2021. Our foreign trade volume, on the other hand, was realised as $496.7 billion, while our foreign trade deficit has also maintained its downward trend in 2021. Besides, the export/import coverage ratio reached to 83.1 per cent by upsurging 5.8 points compared to previous year.

In addition to the historical figures in trade of goods in 2021, the strong performance in the services trade is also worth underlining. As Türkiye, we achieved a strong recovery in our service exports by achieving $53 billion with a 60 per cent increase compared to 2020. For the medium term, we aim to increase our current service exports to $100 billion.

Türkiye’s abovementioned success is stemmed from the constructive interaction with its neighbors. In this regard, I would like to highlight that Türkiye attaches great importance to its strategic and economic partnership with Gulf region. In this respect, our entrepreneurs have joint endeavours aiming to persistently expand their commercial and economic relations.

Bilateral Commercial and Economic Relations

We are on the eve of a new era in Türkiye-UAE relations. The best indicator of this was the visit of His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces to Türkiye on 24 November 2021. During this visit, H.E. 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 visited the UAE with my delegation for the occasion of 10th Session of Joint Economic Commission (JEC) meeting which was held after the four-year interval. On the margin of this occasion, Business Council meeting was also conducted and I had a chance to visit the Expo 2020 Dubai.

I am of the opinion that both countries should endeavor to encourage their respective enterprises and organisations to enhance their participation in exhibitions, fairs and other promotional activities organised in both countries. In this vein, Expo 2020 Dubai is a remarkably significant tool for fulfilling these endeavours.

The UAE is one of Türkiye’s main trading partners in the region. As both our economies’ magnitude and complementarity are consistently growing, there will surely be even greater potential to exploit for our mutually beneficial cooperation. Unfortunately, bilateral trade flow in recent years followed a fluctuating course. Our trade volume which reached approximately $15 billion in 2017, was sadly declined to $7.9 billion in 2021. I believe that these figures are far from reflecting the potential between our countries. We should strive for eliminating the barriers confronted by the business circles in order to improve bilateral trade and economic relations.

While diversifying the fields of cooperation to improve our commercial ties; an important point that has to be taken into consideration is the mutual investments between two countries. Currently, there are 538 UAE companies operating in Türkiye with an investment amount of $4.9 billion. On the other hand, Turkish investments to the UAE have hit almost $1 billion.

Lately, as a prominent indicator of our strong cooperation, the UAE has undertaken to allocate $10 billion fund for the investments in Türkiye, on various strategic sectors such as energy, petrochemicals, technology, transportation, infrastructure, healthcare, financial services, food and agriculture.

Considering Türkiye's assets like unique geographical location, proximity to the local and the regional markets coupled with wide network of free trade agreements, skilled labour force, well-developed infrastructure and liberal foreign investment law, we hope to attract more and more UAE investors in the coming years. I firmly believe that increasing our bilateral investment relations will contribute to deepen economic and commercial relations, too.

Similarly, construction is another important segment on our commercial relations. So far, Turkish construction companies operating in the UAE have undertaken 141 projects with a total value of $12.6 billion. Our contracting firms have accomplished many prestigious projects in various countries around the world. Within this regard, I strongly believe that our cooperation in this area will increasingly continue.

In parallel to growing trend of Türkiye-UAE bilateral commercial and economic relations, the Central Bank of the Republic of Türkiye and the Central Bank of the UAE announced the establishment of a Bilateral Currency Swap Agreement between the Turkish Lira (TRY) and the UAE Dirham (AED). The nominal size of this Swap Agreement is mutually TRY64 billion and Dh18 billion.

The agreement, which is designed to promote bilateral trade with the aim of further strengthening financial cooperation between the two countries, will stand for a period of three years, with the possibility of an extension. This reflects our motive to enhance bilateral cooperation in financial matters and demonstrates the two central banks’ commitment to deepen bilateral trade in local currencies in order to further economic and financial relations between our countries.

Green Transformation

As per Türkiye’s target of carbon neutrality by 2053, we have published 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 per cent to 50 per cent by 2050 and reduce power generation’s carbon footprint by 70 per cent.

I believe that the green transformation efforts in our countries will create new cooperation venues for our companies. In this regard, our companies’ joint investments to the green sectors will have a huge potential to contribute both countries’ ongoing green growth.

Last word

As being the Minister of Trade of the Republic of Türkiye, I am very pleased to see that our countries significantly step up the efforts for the further cooperation in all dimensions of economy, finance and trade.

Considering the fact that Türkiye and the UAE are important actors contributing to the stabilisation of our region, deepening our cooperation will not only to the interest of our nations, but also lead to the prosperity and well-being of the Middle East.