Türkiye, Azerbaijan and Georgia on Tuesday marked the launch of full-capacity operations on a key freight and passenger link between Europe and China.

A vital segment of the Middle Corridor, the Baku-Tbilisi-Kars (BTK) railway line was launched in 2017 and has since played a significant role in strengthening links between Asia and Europe.

Attending the ceremony in the Georgian town of Akhalkalaki, Turkish Transport and Infrastructure Minister Abdulkadir Uraloğlu said the transport vision jointly advanced by Türkiye, Georgia and Azerbaijan is critical for the future of connectivity between Asia and Europe.

The three countries are also linked by the Baku-Tbilisi-Ceyhan oil pipeline and the Baku-Tbilisi-Erzurum gas line. Trade links between Türkiye and the Caucasus region were limited before the BTK was inaugurated.

The link starts in Baku, the capital of Azerbaijan, trains stop in the Georgian capital Tbilisi, pass through gauge-changing facilities in Akhalkalaki and end their journey in the northeastern Turkish town of Kars.

“The Middle Corridor and its key component, the Baku-Tbilisi-Kars railway line, are not just regional transportation projects but strategic initiatives shaping the future of global connectivity,” Uraloğlu said.

The link reduces journey times between China and Europe to around 15 days, which is more than twice as fast as the sea route.

Trains can depart from cities in China, cross into Kazakhstan at the Khorgos Gateway, be transported across the Caspian Sea by ferry to the New Port of Baku and then be loaded directly onto the BTK and head to Europe.

Historical significance

Tuesday’s ceremony was also attended by Georgian Prime Minister Irakli Kobakhidze, Economy and Sustainable Development Minister Mariam Kvrivishvili and Azerbaijan’s Digital Development and Transport Minister Rashad Nabiyev.

Kobakhidze said the project demonstrates the robust strategic relations between the three countries.

“This is a project of historical significance,” he noted.

Nabiyev echoed the view, saying the launch of the railway marked the beginning of a “new chapter” in the history of Eurasian connections.

“But that was just the beginning,” he added.

Nabiyev touted the line as the best transit route between the Caspian and Black Seas.

“We invested in the 184-kilometer section of the line that passes through Georgian territory. Thirteen stations, 55 bridges, eight traction substations, and more than 320 structures were constructed and put into service,” he noted.

He said this was not only a repair project, but a “strategic” decision to transform the line into the “backbone” of the Middle Corridor.

“The result is clear for all to see,” Nabiyev said.

Uraloğlu said the completion of infrastructure works on the Georgian section of the railway marks a new phase that will enable the line to operate more efficiently and effectively, further strengthening its role within the Middle Corridor.

The line has the capacity to transport one million passengers and 5 million tons of freight.

Critical timing

Uraloğlu said recent disruptions in critical maritime routes, supply chains and international trade networks had demonstrated the growing importance of overland transport corridors.

“Corridors once considered alternatives during times of crisis are, in fact, insurance policies for global trade,” Uraloğlu said. “Land corridors are no longer merely alternatives; they have become strategic components of global trade and supply-chain resilience.”

He added that having alternative routes alone is insufficient, stressing the need for high-capacity, reliable and uninterrupted transport networks.

“The world today does not only need new trade routes; it needs reliable trade routes,” he said, describing the completion of the BTK railway’s capacity expansion at a time of heightened global uncertainty as particularly significant.

Uraloğlu said the success of the Middle Corridor would depend not only on infrastructure investments but also on operational coordination, consistent cargo flows and service reliability.

“The world is looking not at the capacity of the BTK railway, but at its performance,” he said. “Our success will be measured not by the kilometers we build, but by the quality of service we provide, transit times and the confidence of users.”

He said connectivity had evolved beyond a transportation issue and become a key element of economic security, supply-chain resilience and sustainable development.

Türkiye continues to strengthen its role as a regional logistics hub through projects including the BTK railway, the Marmaray rail tunnel beneath the Bosporus, the Halkalı-Kapıkule railway project and broader logistics infrastructure investments, Uraloğlu said.

He also highlighted ongoing work on the INRAIL project, which is expected to increase rail freight capacity between Asia and Europe through Istanbul. Once completed, the project will provide a new uninterrupted 24-hour rail connection for freight trains between the two continents.

“The world is not looking for alternative routes anymore; it is looking for routes it can trust to function,” Uraloğlu said. “The future of global trade will belong not to the shortest routes, but to the most reliable ones.”

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Eurozone inflation picked up further in May as the Middle East war sent energy costs soaring, official data showed Tuesday, reinforcing the likelihood of an interest rate hike in the single currency area.

Consumer price rises accelerated to 3.2% last month, the EU’s statistics agency Eurostat said, up from 3.0% in April.

The reading was in line with forecasts from analysts polled by Bloomberg but lower than the 3.3% predicted by economists for FactSet.

Inflation in the single currency area is sharply higher than the 2% target set by the European Central Bank (ECB), following a third consecutive rise.

Of particular importance for the ECB ahead of its next meeting on June 11 is core inflation, which strips out volatile energy and food prices.

Core inflation accelerated to 2.5% in May after 2.2% in April, Eurostat said, above the 2.4% forecast by economists for Bloomberg and FactSet.

Analysts and investors have been expecting the ECB to raise rates to signal its willingness to act in keeping a lid on inflation.

“This is the expected uptick in inflation that will motivate the central bank to decide on an ‘insurance’ hike,” ING Bank’s Carsten Brzeski said in a note.

The European Union’s economy is more vulnerable to fluctuations in energy prices because it is a net energy importer.

Energy price inflation rose to 10.9% in May from 10.8% in April, while services inflation surged to 3.5% last month from 3.0% in April.

The EU executive expects inflation to remain above the ECB’s target this year.

Brussels has sharply raised its forecast for inflation in the 21-nation eurozone to 3.0% this year, after a previous prediction of 1.9%.

“For inflation in the eurozone, the only way is currently up. Not a sharp up but a rather moderate and gradual lift,” Brzeski said.

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Housing costs continue to command an increasingly large share of Turkish household budgets, as data on Tuesday showed they accounted for almost a third of their spending in 2025.

Housing and rent category’s share in total household consumption expenditures rose to 29.3% from 26% in 2024, the Turkish Statistical Institute (TurkStat) said.

Transportation ranked second with a 20.5% share, down from 21.6% in the previous year.

Food and non-alcoholic beverages wrapped up the top three categories with a share of 17.3%, compared to 18.1% in 2024, the data showed.

At the other end of the scale, insurance and financial services represented just 0.8% of household spending, up from 0.7%, while education and health accounted for 1.8% and 2.2%, respectively. That compared to 1.6% and 2.3%, respectively, in the previous year.

Property sector has long been the main cause of distress among households as prices leaped since after the COVID-19 pandemic. The stickiness remained despite a downward trend in inflation since late 2023.

The Iran war has dented progress in disinflation this year. Consumer prices rose almost 4.2% month-over-month and nearly 32.4% on an annual basis in April, mainly driven by conflict-linked pricing pressures.

According to TurkStat, housing costs rose nearly 8% on monthly basis and were 46.6% higher compared to a year ago. The calculation based on the 12-month average of the consumer price index showed the rent increase rate for May stood at 32.43%.

Tuesday’s data also showed transportation spending among high-income households was more than three times higher, as a share of total expenditure, than among low-income households.

Households in the highest income quantile allocated 25.7% of their spending to housing and rent and 25% to transportation-related expenses, including vehicle purchases, fuel, passenger transport, maintenance and repairs.

Their spending on food and non-alcoholic beverages accounted for 12.4% of total expenditures.

In contrast, households in the lowest income quantile spent 38.7% of their budgets on housing and rent and 29.2% on food and non-alcoholic beverages, while transportation represented only 8.6% of expenditures.

Spending patterns also varied according to households’ primary source of income.

Households whose main income came from wages and salaries allocated 26.4% of spending to housing and rent, 21.9% to transportation and 16% to food and non-alcoholic beverages.

For households primarily reliant on business or entrepreneurial income, housing and rent accounted for 25.5% of expenditures, while transportation represented 25.9% and food 17%.

Household size also played a significant role in spending priorities.

Single-person households devoted 41% of their budgets to housing and rent, by far their largest expense category, while spending 14.3% on food and 14.4% on transportation.

For households with six or more members, food and non-alcoholic beverages represented the largest spending category at 23.7%, followed by housing and rent at 22.4% and transportation at 18.1%.

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BP is on track to hand ‌over the running of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline to Azerbaijan’s SOCAR from July 1 as part of ​a contractual obligation, British energy major said on Tuesday.

Operational since 2006, the ​pipeline has the capacity to move more ⁠than 1 million barrels per day. It ​is designed to deliver oil from the Caspian ​Sea to the Mediterranean, bypassing politically unstable regions, including Iran and Russia’s Caucasus.

Giovanni Cristofoli, BP’s regional president ​for Azerbaijan, Georgia and Türkiye, announced the ​transfer in a statement, stressing that it was not about ‌BP ⁠divesting and that BP was “excited” to see SOCAR take over as the pipeline’s operator.

BP did not reply to a request for comment ​on the ​nature of ⁠the contractual obligations cited in the statement and what the move ​means for BP’s stake.

State oil firm ​SOCAR ⁠owns 32.97% of BTC via its AzBTC subsidiary. BP has a 30.1% stake, with the remainder ⁠held ​by eight other stakeholders.

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Türkiye’s economy lost momentum in the first quarter of the year, but still remained in positive territory despite the fallout from the Middle East conflict, official data showed Monday.

Gross domestic product (GDP) expanded 2.5% on a yearly basis in the January-March period, compared with 3.4% in the previous quarter, according to Turkish Statistical Institute (TurkStat).

The slowdown coincided with the start of the U.S.-Israel war on Iran, which sent energy prices soaring and revived inflationary pressures.

Authorities had already been pursuing tight monetary policy to sustain disinflation trend, which slowed in recent months as the Iran war pushed energy-market volatility.

Despite multiple shocks and global uncertainty, Treasury and Finance Minister Mehmet Şimşek said the economy maintained uninterrupted growth for 23 consecutive quarters, adding that national income had exceeded $1.6 trillion.

“Global uncertainties and the weak outlook among our trading partners, together with net external demand, limited growth,” Şimşek wrote on the social media platform X.

GDP grew 0.1% from the previous quarter on a seasonally and calendar-adjusted basis, down from 0.4% in the prior three months, the TurkStat data showed.

Surveys had expected a 2.7% annual expansion and about 0.3% growth quarter-over-quarter.

The data also showed the calendar-adjusted chained volume index of GDP increased by 2.6% compared with the same quarter of the previous year.

There was no revision to the 2025 growth rate of 3.6%, the data showed. After growing 4.7% in the second quarter last year, growth slowed to 3.8% and then 3.4% in the following two quarters.

At current prices, GDP rose 35.7% year-over-year to TL 16.99 trillion ($389.6 billion) in the first quarter of this year.

Among economic sectors, information and communication recorded the strongest annual growth, with value added increasing 9.5%.

Other services activities grew 5.2%, followed by agriculture, forestry and fishing at 4.6%, trade, transportation, accommodation and food services at 3.7%, financial and insurance activities at 3.5% and construction at 3.2%.

Real estate activities expanded 3%, while taxes less subsidies on products increased 2%. Professional, administrative and support service activities rose 1.9%, and public administration, education, human health, and social work activities increased 1.8%.

The industrial sector, however, contracted 0.8% during the period.

On the expenditure side, final consumption expenditure of resident households rose 4.8% year-over-year in the first quarter, while government final consumption expenditure increased 2.1%.

Gross fixed capital formation climbed 3%.

Exports of goods and services declined 12.7% year-over-year, while imports of goods and services fell 2%.

Şimşek said industrial value added contracted in the first quarter due to global conditions and calendar effects, while noting growth in agriculture after last year’s decline caused by frost and drought.

He said agriculture is expected to support growth this year.

“Although rising energy costs have caused a temporary slowdown in the disinflation process, our determined stance in the fight against inflation continues,” he stressed.

Consumer prices rose 4.18% month-over-month and 32.37% on an annual basis in April, mainly driven by pressures amid the fallout from the Iran war.

The domestic producer index rose 3.17% month-over-month for an annual increase of 28.59%.

The Central Bank of the Republic of Türkiye (CBRT) has flagged rising inflation risks, saying it’s closely monitoring the fallout of the conflict and ‌potential second-round effects.

Last month, the bank raised its end-2026 interim inflation target to 24% from 16% and lifted its end-2027 target to 15% from 9%. It set its end-2028 interim target at 9%.

The current outlook “may translate into a more marked slowdown in the second half of the year,” analysts at the Dutch financial giant ING said.

But a potential resolution of the Iran war “could help alleviate the current downside pressures on the economic outlook, providing some relief to growth prospects,” they wrote.

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Türkiye and Azerbaijan are expanding their energy partnership beyond ​oil and gas into electricity ‌transmission and green energy corridors, Energy and Natural Resources Minister Alparslan Bayraktar said on ​Monday.

Speaking at the opening ​of Baku Energy Week, Bayraktar said ⁠Türkiye, Azerbaijan, Georgia, Bulgaria and ​southeast European countries were working ​to strengthen regional energy connectivity.

“We are going to create the electricity version of ​TANAP,” Bayraktar said, referring to ​the Trans-Anatolian Natural Gas Pipeline that carries ‌Azerbaijani ⁠gas to Europe through Türkiye.

“You will be hearing much more in the coming weeks and months about the project to carry the electricity resources to Türkiye and, through Türkiye, to Europe,” the minister noted.

The project could extend as far as Central Asia in the future, he said, adding that this would strengthen electricity trade and energy security on a regional scale.

Türkiye is planning a $30 billion upgrade to its electricity transmission and distribution ​system over ​the next ⁠decade to accommodate higher renewable, and also nuclear, ​energy output.

Ankara also plans ​to ⁠upgrade its electricity transmission connections with eastern neighbors Georgia and Azerbaijan, ⁠as ​well as its European ​neighbor Bulgaria, to trade surplus energy.

In a message to the conference, President Recep Tayyip Erdoğan said the proposed Green Electricity Transmission and Trade project linking Türkiye, Azerbaijan, Georgia and Bulgaria is expected to contribute to the energy security of the wider region.

Bayraktar hailed what he described as “exemplary” energy cooperation between Türkiye and Azerbaijan.

The two countries have successfully implemented a series of major energy infrastructure projects, including TANAP, the Baku-Tbilisi-Ceyhan (BTC) oil pipeline and the Baku-Tbilisi-Erzurum natural gas pipeline.

“Together with Azerbaijan, Türkiye makes a significant contribution both to its own energy supply security and to Europe’s energy supply security,” Bayraktar said.

The minister also referred to talks about Turkmen gas being transported to Türkiye and Europe via Azerbaijan.

“All of our counterparts are extremely interested. Perhaps in terms of timing, we have now reached a point where everyone will say ‘yes,'” he said.

Erdoğan also said there are major opportunities to improve cooperation on exporting Turkmen gas via Azerbaijan and Türkiye.

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