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Germany-Turkey Economic Ties

Germany-Turkey Economic Ties

Last Updated on Januar 9, 2024 by Aydoğan Aknar

Unlocking Economic Potential: Germany-Turkey Economic Ties in Focus

In the complex landscape of global economic partnerships, the enduring bond between Germany and Turkey stands out prominently. As Turkish President Recep Tayyip Erdogan engages with German Chancellor Olaf Scholz in Berlin, the spotlight remains firmly on the Germany-Turkey Economic Ties and collaboration that have weathered political storms and crises.

A Resilient Partnership Amidst Controversies

Despite political ups and downs, the economic ties between Germany and Turkey have shown remarkable resilience. Germany has consistently held its position as Turkey’s most significant trading partner and a leading foreign investor.

Record-Breaking Bilateral Trade

In 2022, bilateral trade between the two nations soared to a record high of €51.6 billion ($56 billion). A substantial increase in Turkish exports to Germany fueled this surge, with exports rising by 26.7% to €24.6 billion, and Turkish imports from Germany growing by one-third to €27 billion.

Key Sectors Driving Trade

The dynamics of this economic relationship are underscored by Turkey’s export of goods worth €14.5 billion to Germany by October 2023. These exports predominantly include products from the automotive industry, textiles, foodstuffs, boilers, and intermediate goods in iron, steel, and aluminum.

Strategic Import Profile of Turkey

Conversely, Turkey primarily imports machines, vehicles, plastic products, aircraft, chemicals, and medical equipment from Germany. Notably, only Russia and China surpass Germany in delivering goods to the Turkish market.

Deep-rooted and Crisis-Proof Relations

Ayhan Zeytinoglu, president of the Economic Development Foundation (IKV), asserts that German-Turkish economic relations are not only deep-rooted but also crisis-proof. Germany, among Turkey’s largest trading partners, maintains a balanced relationship, setting it apart from counterparts like Russia and China.

Expectations for Erdogan’s Visit

As Erdogan visits Berlin, Turkish business representatives are keen on addressing the issue of Turkey’s customs union with the European Union. There is a collective call for modernization, with the hope that Germany will leverage its influence to facilitate necessary reforms.

The Customs Union Conundrum

The existing customs union, in place since 1995, allows free exchange of goods and alignment of tariffs and regulations. However, critics assert that the agreement is outdated, pointing out difficulties in consultation and dispute resolution, while Turkey emphasizes visa restrictions affecting businesspeople and truck drivers.

Urgency for Customs Union Reform

Bulent Aymen, vice president of the AKIB, emphasizes the urgency of modernizing the customs union. He notes that global trade has evolved significantly over the past 25 years, rendering the current agreement inadequate to meet the economy’s needs.

German Investments and Mutual Benefits

The German Chamber of Commerce Abroad (AHK) estimates that German businesses have invested approximately €11.5 billion in Turkey between 2002 and 2022. Over 8,000 German companies operate in Turkey, creating a symbiotic relationship where Germany benefits from Turkey’s geopolitical influence, and Turkey gains from Germany’s technological and financial strength.

A Call for Inclusive Free Trade Agreements

Turkish business representatives advocate for Turkey’s inclusion in EU free trade deals, labeling the current exclusion as a “great injustice.” As a member of the customs union, they advocate for a seat at the table when negotiating agreements with third countries.

Diversification into Renewable Energy

In addition to traditional trade, both nations are exploring new avenues in renewable energy. The German-Turkish Energy Partnership, initiated in 2012, has paved the way for collaboration in transitioning from fossil fuels to renewable sources. German wind turbine manufacturers, including Enercon and Nordex, have established significant operations in Turkey.

Turkey’s Economic Challenges

While economic cooperation thrives, Turkey faces internal economic challenges. The Turkish lira’s depreciation and inflation concerns persist, prompting efforts by officials like Mehmet Simsek to restore faith in the country’s economic stability.

The Call for Customs Union Modernization

Simsek, appointed to lead Turkey’s economic portfolio, has urged the EU to modernize the customs union. However, challenges in relations between Europe and Turkey, as highlighted by EU Commissioner Paolo Gentiloni, suggest that progress may be elusive in the near term.

Germany-Turkey Economic Ties and Navigating Challenges for a Stronger Future

In conclusion, the Germany-Turkey economic partnership has navigated challenges, proving its resilience. As both nations strive for a modernized customs union and delve into new areas like renewable energy, the potential for mutual growth remains substantial.

FAQs

Q1: How significant is Germany as a trading partner for Turkey?

A: Germany holds a pivotal position as Turkey’s most important trading partner and a top foreign investor.

Q2: What drove the surge in bilateral trade in 2022?

A: The record-breaking bilateral trade in 2022 was propelled by a substantial increase in Turkish exports to Germany.

Q3: Why is there a call for modernizing the customs union?

A: Critics argue that the existing customs union is outdated, faces challenges in consultation and dispute resolution, and needs modernization.

Q4: How are German businesses contributing to Turkey’s economy?

A: German businesses have invested approximately €11.5 billion in Turkey, contributing over 6% of foreign investment.

Q5: What challenges does Turkey face in terms of its economic stability?

A: Turkey grapples with challenges such as the depreciation of the Turkish lira and concerns about inflation.

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