Economy
Halkbank stock soars as US drops case against Turkish public lender
Türkiye’s Halkbank said it had reached an agreement with the U.S. Department of Justice to settle a yearslong case against the state-run bank over alleged violation of sanctions on Iran, in a move analysts said could pave the way to solving other diplomatic disputes.
Under the terms of a deferred prosecution agreement, the bank “will not admit to any criminal offenses, nor will it pay any judicial or administrative fines,” the bank said in a statement late on Monday.
The agreement, if approved by a judge, would relieve one of the main irritants between Türkiye and the U.S., as the NATO allies experience their best ties in decades following Donald Trump’s return to the U.S. presidency last year.
Halkbank stock surged as much as 9% on Tuesday. The Istanbul-listed shares had already closed 10% higher on Monday, the exchange’s maximum permitted increase.
The stock was up 4.5% at TL 49.88 ($1.13) at 0805 GMT.
U.S. prosecutors charged Halkbank in 2019 for allegedly helping Iran evade American economic sanctions.
Halkbank pleaded not guilty.
President Recep Tayyip Erdoğan repeatedly rejected the charges against the bank, insisting that Ankara did not violate the U.S. embargo on Iran. Erdoğan once called the case unlawful and “ugly.”
Boon for Türkiye-U.S. ties
There had been signs that U.S. President Donald Trump was willing to end the long-running legal case, which was discussed in talks with Erdoğan at the White House in September.
Speaking to reporters a month later, Erdoğan said he had been assured by Trump that the complicated legal problem with Halkbank was “over.”
“Following the submission of a compliance report,” Halkbank and the U.S. attorney’s office in New York will submit a joint letter to the court “requesting the dismissal of the case,” the bank said in the statement.
“With the court’s approval, the criminal case against our bank in the US… will be concluded,” it added.
The bank said it had been informed by the U.S. Treasury’s Office of Foreign Assets Control (OFAC), which is responsible for enforcing sanctions, “that it has closed the administrative proceedings against Halkbank without taking any further action.”
No money will change hands, and the charges will likely be dismissed after the monitor reviews Halkbank’s compliance, according to the agreement.
Deferred prosecution agreements let defendants avoid charges if they meet various conditions, typically over several months or a few years. The government dismisses cases after the defendants comply.
The U.S. government said on Monday the deal to resolve the case furthers its interest in curbing support for Iran, with which it is engaged in an expanding air war alongside Israel.
Türkiye seeks F-35 jets
With the Halkbank charges settled, the sides could begin to make progress resolving U.S. sanctions that currently block Ankara from purchasing U.S. F-35 fighter jets, a key demand from Türkiye.
“Trump and Erdoğan appear to be steadily clearing major disputes from the U.S.-Türkiye agenda,” said Hakan Akbaş, managing director at consultancy Strategic Advisory Services, pointing to easing tensions over Syria and now the Halkbank case.
“It raises the question whether Washington might soon clear the way for Ankara to purchase F-35 fighter jets despite existing sanctions.”
During Trump’s first term, the U.S. imposed sanctions on Türkiye over its acquisition of Russian S-400 missile defense systems, and excluded it from the F-35 fighter jet manufacturing and procurement program.
Ever since, Ankara has repeatedly called the move unfair and voiced hope that the sides could overcome the issue during Trump’s second term.
Erdoğan raised the issue during the September meeting with Trump, who later said the U.S. was “very seriously” considering the sale of F-35s to Türkiye.
The sides have said they are seeking a workaround to lift the sanctions.
China’s trade grew by a fifth in the first two months of the year, far exceeding forecasts as stronger exports to major markets balanced out a drop in shipments to the U.S., according to official data released on Tuesday.
The boost is a lifeline for the world’s second-largest economy as domestic consumer activity has slumped, and adds to the record surplus achieved last year.
Official figures for the first two months of the year – usually combined to account for distortions arising from the varying Lunar New Year holiday – showed a strong start to 2026, before war broke out in the Middle East.
Exports climbed 21.8% year-over-year, the General Administration of Customs said, beating the 7.2% predicted in a Bloomberg survey of economists.
“Exports are likely to remain robust given the recent decline in U.S. tariffs and strong demand for semiconductors,” said Zichun Huang of Capital Economics.
Many of China’s key trading partners have increasingly called on Beijing to reduce its soaring trade surplus owing to its impact on local competition.
Globally, China saw significant increases in exports of products including automobiles, clothing and household appliances during the two months, the customs data showed.
The reading comes as Chinese leaders gather for a closely watched annual political meeting, which last week saw the government announce its lowest economic growth target in decades.
Among the challenges is a years-long slump in domestic spending, which has failed to recover since the end of the pandemic.
But in a sign of rebounding activity, the latest figures showed imports soared 19.8% in January-February, smashing the 7% estimated in the Bloomberg survey.
Oil imports surge
The jump follows official data on Monday that revealed consumer prices rose last month at their fastest pace in three years.
Meanwhile, exports to the U.S. sank 11.0% as President Donald Trump pressed ahead with his tariff campaign.
Beijing and Washington were locked in a blistering trade war last year, which at one point saw reciprocal levies in the triple digits.
There are hopes that tensions could cool, with Trump set to travel to China at the end of the month.
Shipments to the U.S. totalled $67.24 billion in January-February, the figures showed, compared with $75.56 billion in the same period last year.
That was offset, though, by exports to the European Union, which jumped 27.8%, while those to the Association of Southeast Asian Nations (ASEAN) climbed 29.2%.
However, “events in the Middle East will increase China’s oil import bill but weigh on its import volumes,” Huang said in a note.
Worries about the global economy have intensified this month after the U.S.-Israel war on Iran sent oil prices soaring to their highest since Russia’s 2022 invasion of Ukraine.
The conflict has seen the crucial Strait of Hormuz – through which a fifth of global oil travels – effectively shut off.
With tensions already rising last month, imports of oil by China – the world’s largest importer of the commodity – jumped 16% in January-February combined, the customs data showed Tuesday.
The strong export growth will likely “reinforce” the argument of trading partners concerned about China’s ballooning trade imbalance, wrote Zhiwei Zhang, president and chief economist of Pinpoint Asset Management.
Commerce Minister Wang Wentao acknowledged that China’s trade needed balancing when he spoke at a news event on Friday on the sidelines of the “Two Sessions” political meeting in Beijing.
“Exports and imports are like the two wheels of a vehicle. If they are balanced, the vehicle runs smoothly and goes further,” Wang said.
Pinpoint’s Zhang added that strong exports and a lower official growth target “suggest that China is unlikely to launch stimulus any time soon.”
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.
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 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.
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