Economy
German industrial orders drop more than expected in January
German industrial production and orders declined far more than expected in January, official data showed Monday, piling pressure on Chancellor Friedrich Merz to revive Europe’s top economy, which has long been struggling with weak or no growth.
Production ticked down 0.5%, the federal statistics office Destatis said, compared to a rise of 0.9% expected in a poll of analysts by financial data firm FactSet.
Industrial orders, meanwhile, plunged 11.1%, a far bigger fall than the 5.2% decline expected in a FactSet analyst poll.
“These numbers are a clear disappointment,” said economist Dirk Schumacher of public lender KfW.
“The simultaneous slump in order intake indicates that the upturn has so far left industry behind.”
A series of brighter data releases since the start of the year had boosted hopes that German industry – struggling with weak demand, U.S. tariffs, high energy costs and fierce Chinese competition – could be turning a corner.
But new figures underline just how fragile any recovery is, making grim reading for Merz, who has made boosting Germany’s flatlining economy his top priority.
Increased government spending on defense and other sectors was helping some sectors, Schumacher said, but there was little evidence this was sparking a widespread recovery.
“There are certain areas, such as the defence sector, which are developing very dynamically,” he said. “However, this is not enough to trigger a broad upturn in industry.”
Germany’s economy has barely grown since 2022, following a burst of pent-up demand after the Covid pandemic. In January, the government lowered its growth forecast for 2026 to 1%.
The export climate for Turkish manufacturers continued to improve moderately in February, a survey released on Monday showed.
The Manufacturing Export Climate Index, which tracks the performance of Türkiye’s top export markets, remained unchanged at 52.1 in February, the same level recorded in January, the Istanbul Chamber of Industry (ISO) said.
The index has now stayed above the 50 threshold for 26 consecutive months, signaling continued improvement in demand conditions across key export markets.
Any reading above 50 indicates improving export market conditions, while values below that level point to deterioration.
The latest data suggests that the export environment for manufacturers remained moderately supportive midway through the first quarter of the year, with demand conditions strengthening without interruption for more than two years.
Growth across key export markets
Economic activity increased in seven of the 10 largest export markets for Turkish manufacturers in February, the survey said.
All of the top four markets, together accounting for more than a quarter of Türkiye’s manufacturing exports, were among those posting growth.
Expansion remained strong in Germany and the United Kingdom, although the pace of growth in the U.K. slowed slightly compared with January. In Germany, growth accelerated to its fastest pace in four months.
In the United States, economic activity continued to increase, but the rate of expansion slowed to the weakest level in four months.
Strong growth in UAE, slowdown in some European markets
Outside Europe, non-oil economic activity in the United Arab Emirates (UAE) expanded strongly, with growth reaching its fastest pace in 22 months.
Among the economies tracked by the survey, the UAE recorded the second-fastest growth after Singapore.
However, production declined in several important export destinations, including France, Romania and Poland.
While the downturn in France and Poland eased compared with January, Romania saw a sharp contraction in manufacturing output. The decline was the steepest since the survey began in July 2023. Romania accounts for roughly 3% of Türkiye’s manufacturing exports.
Meanwhile, February data pointed to strong production growth in China, with the pace of expansion reaching its highest level since May 2023.
Andrew Harker, economics director at S&P Global Market Intelligence, said improving demand conditions in most key export markets could support new business opportunities for Turkish manufacturers in the coming months.
Harker added that it remains to be seen whether recently announced U.S. tariffs will affect these trends, but for now the overall tone of the global economy appears broadly positive.
Türkiye is turning its focus to modernizing its customs union with the European Union after securing recognition within the bloc’s emerging “Made in Europe” industrial framework, according to a senior official on Monday.
The EU unveiled last week its intensely debated Industrial Accelerator Act (IAA) that will set low-carbon and “Made in EU” requirements for public procurement of, or subsidies for, making aluminum, cement and steel, and technologies including wind turbines, electrolysers or electric vehicles.
Türkiye and the business world long advocated for Türkiye’s inclusion into the framework.
Trade Minister Ömer Bolat on Monday said recent developments in the EU’s industrial policy reflect the impact of Türkiye’s diplomatic and business outreach.
He said Ankara was pleased to see that the draft industry support framework adopted by the European Commission includes references to the customs union, which he says helps safeguard trade flows and investments between Türkiye and the European Union.
“Including the customs union within this framework means securing both our mutual trade and the investments that European companies have made in Türkiye,” Bolat said.
He spoke at an event titled “Customs Union in its 30th Year and Türkiye-European Union Relations” organized by the Economic Development Foundation.
Moreover, he emphasized that Türkiye remains an indispensable part of the European industry and supply chain, noting that the country now ranks as the 16th largest economy in the world with a national income of $1.6 trillion.
The minister highlighted that the “Made in Europe” initiative became a primary concern in early December, leading to a period of intense trade diplomacy and stress regarding potential steel quotas and scrap export restrictions.
Bolat stressed that the most critical turning point in these negotiations was the comprehensive letters sent by President Recep Tayyip Erdoğan to EU leaders in mid-December to voice deep concerns and expectations for a positive outcome.
He also suggested that during the 30-year period of the customs union, the EU became the largest trading partner for Türkiye, while Türkiye evolved into a vital partner for the bloc.
He pointed out that total bilateral trade volume surged from $26.6 billion in 1995 to $233 billion in 2025, representing a ninefold increase that reflects the deepening economic integration between the two sides.
According to the minister, Türkiye conducts 43% of its total exports to the EU, while 32% of its imports originate from the union, with exports rising from $11 billion to $117 billion over three decades.
Bolat added that the relationship extends far beyond mere trade, as 70% of the $287 billion in direct international investment that entered Türkiye between 2003 and 2025 came from firms based in the European Union.
The world is going through a period of heightened uncertainty and sharp swings in energy prices, but past experience suggests such shocks are unlikely to be permanent, Treasury and Finance Minister Mehmet Şimşek said on Monday.
Şimşek’s remarks came as oil prices skyrocketed to levels not seen since mid-2022, as some major producers cut supplies and fears of prolonged shipping disruptions gripped the market due to the expanding U.S.-Israeli war with Iran.
Crude oil futures soared almost 30% on Monday to nearly $120 a barrel, one of its biggest one-day jumps on record, threatening to raise costs of products from gasoline to jet fuel.
Brent crude futures were last up $12.77, or 14%, at $105.46 per barrel, while U.S. West Texas Intermediate (WTI) crude futures were up $12.66, or 14%, at $103.56.
Brent has surged as much as 66% and WTI 77% since their last close before the U.S. and Israel started attacks on Feb. 28.
Monday’s prices compare with all-time highs of around $147 a barrel for the contracts in 2008, according to LSEG data going back to the 1980s.
The key Strait of Hormuz waterway, through which roughly one-fifth of the world’s oil and liquefied natural gas typically passes, is virtually shut.
That could leave consumers and businesses worldwide facing weeks or months of higher fuel prices even if the conflict ends quickly, as suppliers grapple with damaged facilities, disrupted logistics and elevated risks to shipping.
The current volatility is leading to more worries that higher energy costs will fuel inflation and make it harder for central banks to ease policy.
Authorities of Türkiye are closely monitoring developments and stand ready to take necessary measures, Şimşek said on Monday.
“We are going through a period marked by high global uncertainties and sharp fluctuations in energy prices,” he wrote in a post on social media platform X.
“Past experience shows that such shocks are not permanent,” he added.
Necessary measures
Şimşek said pricing in the forward oil markets also suggested that the current movement may be “temporary.”
“Economies with strong fundamentals have the capacity to quickly rebalance and recover,” he said.
“As economic management, we are closely monitoring developments and taking the necessary measures. It is important for our citizens, investors, and businesses to assess this process rationally,” he suggested.
With hostilities continuing in the Middle East and tankers unable to cross the Strait of Hormuz amid the threat of Iranian drone attacks, investors were bracing for a long stretch of higher energy costs.
Officials on Monday said Group of Seven (G-7) nations were to convene to discuss potentially dipping into their emergency oil stockpiles in response to soaring prices.
Türkiye, which for years has been working on curbing oil and gas imports by ramping up domestic production, still heavily relies on imports to meet its energy demand needs.
In response to the conflict, Turkish authorities reintroduced the so-called sliding “scale system” to mitigate the impact of the perceived temporary increase in oil prices.
The system adjusts the special consumption tax (ÖTV) on fuel products in line with changes in oil prices to prevent excessive price increases.
Shortly after the start of the conflict, Ankara also convened the Financial Stability Committee, which said it would take all necessary steps to ensure market functioning and contain the fallout.
Meanwhile, the Capital Markets Board (SPK) on Sunday extended the ban on short-selling until the end of the March 13 session at the Istanbul stock exchange.
All eyes will now turn to the Central Bank of the Republic of Türkiye (CBRT), which will gather for its Monetary Policy Committee (MPC) meeting on Thursday and is widely expected to pause its easing cycle.
The central bank has slashed interest rates by 900 basis points since mid-2025 to 37% as annual inflation slowed from over 40% at the beginning of last year to just over 30% in January.
But a rise to 31.5% last month signaled a slowdown in disinflation, and the escalating U.S.-Israeli war with Iran threatens to drive prices higher.
In response, the central bank already took a series of steps last week, including pushing the market overnight rate to about 40%.
Türkiye’s exports to Germany achieved their highest February performance of all time, with volume at about $1.66 billion, according to a report on Monday.
Türkiye’s exports in general continued to demonstrate a positive trend despite challenging international economic, trade, political, and geopolitical developments. The effective trade diplomacy carried out by Türkiye is also considered to have had a positive impact on its exports.
The country’s total exports last month increased by 1.6% compared to the same period last year, reaching $21.06 billion in February, according to information compiled by Anadolu Agency (AA) from the data shared by Türkiye Exporters Assembly (TIM).
At the same time, Türkiye’s monthly exports to Germany rose 11.9% year-over-year when they stood at about $1.48 billion.
Thus, Germany maintained its leadership in Türkiye’s exports.
Meanwhile, exports to other countries in February were as follows: to the United Kingdom (1.1 billion), Italy (1.01 billion), the U.S. (some $994.7 million) and France ($861.6 million).
Automotive industry leads exports
When examining the sectors that exported the most to Germany and increased their exports the most during this period, the industrial group stood out.
In February, the sector that exported the most to Germany was the automotive industry with $543.9 million.
This sector was followed by ready-to-wear and apparel with $198.2 million, iron and non-ferrous metals with $130.4 million, chemical substances and products with $116.9 million, and the electrical and electronics sector with some $100.2 million, respectively.
In February, the automotive industry also stood out in export increases compared to the same period last year. During this period, the automotive industry saw its shipments rise by $75 million to Germany.
In export growth, the automotive industry was followed by iron and non-ferrous metals and chemical substances and products with $22.7 million each, hazelnuts and hazelnut products with $15.2 million, and the jewelry sector with $13.5 million.
The iron and non-ferrous metals sector exported $130.4 million to Germany, while the export volume of hazelnuts and hazelnut products sector was worth $63.2 million, according to the data.
U.K. borrowing costs surged again on Monday on rising energy prices, while the government is talking to international partners and its central bank to assess ways to limit economic damage from the escalating Iranian crisis, Prime Minister Keir Starmer said, warning a prolonged crisis could be painful.
British borrowing costs have soared since the conflict erupted more than a week ago – by more than those of other European countries and the U.S. – as investors fear that surging oil and gas prices will stoke already stubborn inflation.
Rate futures on Monday suggested investors were largely bracing for an interest rate increase by the Bank of England (BoE), reversing bets on a cut.
“The longer this goes on, the more likely the potential for an impact on our economy,” Starmer said.
The jump in energy prices also risks forcing the government to intervene again to cushion the economic blow if the conflict rages on, a potential huge challenge to a government that has limited room to increase spending and is widely unpopular.
‘Monitoring the risk’
Starmer told an event in London on Monday that the government was trying to limit the fallout.
“What we’re doing is monitoring the risk, working with others to mitigate the risk,” he said.
“The chancellor is talking with the Bank of England every day to make sure that we’re ahead of that, on energy prices for households.”
Starmer also said the government was talking to international partners about how to reduce the economic impact from the conflict, which Britain wanted to de-escalate.
Britain’s economy is particularly exposed to the price of gas.
When energy prices spiralled after Russia’s 2022 full-scale invasion of Ukraine, the then Conservative government was forced to spend more than 40 billion pounds ($53 billion) to protect businesses and households from the impact.
Gas prices have more than doubled since the U.S. and Israel struck Iran, and Tehran hit its Gulf neighbors, limiting the production and transport of oil and gas in the region.
Starmer said Britain’s system of capping energy tariffs would limit any sharp price rises for households until July.
A leading economist said rising energy bills, if maintained, would hit economic growth and could force Treasury chief Rachel Reeves to borrow more if the government also has to hike defense spending again.
“That’s one of the reasons markets are concerned and why we’re paying more for our borrowing,” Paul Johnson, a former director of the Institute for Fiscal Studies, told Times Radio.
Starmer said on Monday that the economy was more resilient than during the last energy shock in 2022.
The Turkish central bank is widely expected to keep its interest rates steady at the upcoming policy meeting on Thursday in response to the tense geopolitical situation and global market fallout, recent polls showed.
The Central Bank of the Republic of Türkiye (CBRT) would thus halt its easing cycle and hold interest rates at 37%, most economists polled by Anadolu Agency (AA) and Reuters anticipate.
All 10 economists polled by Reuters forecast that the bank will hold the benchmark rate on March 12. Similarly, a vast majority of economists in a poll by AA also expected that the CBRT would hold rates steady, with only one forecasting a small 50-basis-point cut.
Before the expanding regional conflict began shifting market expectations, the bank had previously been expected to continue an easing cycle that began in late 2024.
A year ago, the central bank temporarily reversed course and hiked rates, though it returned to rate cuts by mid-2025.
This week’s shift in market expectations also led to an upward revision in year-end rate forecasts. The median estimate for end-2026 now stands at 29.75%, compared with 28% in the previous Reuters poll, while some economists declined to make predictions for now.
JPMorgan, which, like most analysts, had previously predicted a cut at the March meeting, said on Monday it now expects the bank to hold and also revised its year-end forecast to 31% from 30%.
HSBC also forecast a hold, noting the Monetary Policy Meeting (MPC) has repeatedly said the easing cycle will be cautious and data‑dependent.
“We think that in the context of significant geopolitical uncertainty and growing energy price risks, an on‑hold decision is the most likely outcome,” HSBC said in a research note.
Türkiye’s inflation rate rose slightly on an annual basis to 31.5% in February, while the monthly figure cooled to 2.96%, compared to the higher-than-expected 4.84% increase in January, official data revealed earlier this month.
The central bank, at its first quarterly inflation report last month, lifted its year-end inflation forecast to the 15%-21% range, while keeping its interim target at 16%.
CBRT Governor Fatih Karahan, at the time, emphasized progress on disinflation and suggested that policymakers “are decisively maintaining our tight monetary policy stance to ensure the continuation of the disinflation process in line with targets.”
“We stand ready to tighten our monetary policy stance in case of a significant deviation in the inflation outlook from the interim targets,” he also said.
Oil prices
However, since the U.S.-Israel attack on Iran and its retaliatory aerial attacks, exports from major Gulf oil producers have largely halted, causing a sharp rise in energy prices and stoking supply and inflation concerns on a global scale.
Market volatility triggered by the conflict prompted Treasury and Finance Minister Mehmet Şimşek to convene the Financial Stability Committee, which said it would take all necessary steps to ensure market functioning and contain the fallout.
Turkish institutions have meanwhile issued temporary proactive measures, including liquidity steps that helped push the overnight rate roughly 300 basis points higher to about 40%.
At the same time, Ankara on Thursday announced that the so-called “sliding scale system” was temporarily activated to mitigate the impact of the perceived temporary increase in oil prices.
Economists said that one key factor limiting upward revisions in inflation expectations was this system, which adjusts the special consumption tax (ÖTV) on fuel products and prevents higher oil prices from being fully passed through to consumers.
The central bank will announce its next interest rate decision at 11 a.m. GMT (2 p.m. local time) on March 12.
-
Daily Agenda2 days agoDirector of Communications Duran announced: Access to 41 social media accounts targeting the domestic front has been blocked
-
Sports1 day agoRussell, Mercedes dominate down under to win F1 season opener
-
Politics8 hours agoOpposition to US-Israel-Iran war unites Spaniards, Turks
-
Politics9 hours ago14 migrants die after smuggling boat sinks off southern Türkiye
-
Daily Agenda8 hours agoMinistry of National Defense: The missile fired from Iran was destroyed! Ammunition pieces fell on empty lands in Gaziantep
-
Daily Agenda2 days agoErdogan met with children at iftar
-
Politics1 day agoTürkiye rejects report MIT asked MI6 to protect Syria’s president
-
Sports8 hours agoGalatasaray set to turn up Champions League heat against Liverpool