Recent heat waves across the European continent, which have pushed temperatures above seasonal norms, are boosting demand for heating, ventilation and air conditioning (HVAC) products, driving double-digit growth in Turkish exports to the region.

Extreme heat waves across the continent are reshaping daily life and demand for climate control products, which were once deemed luxury items.

Europe appears to be particularly exposed and vulnerable to climate change, with many countries, including the U.K., France and Spain, witnessing heat waves in recent weeks, most notably at the end of June.

European countries have reported more than 10,000 excess deaths during the record-breaking heatwave that engulfed the west of the continent in late June, official data showed recently.

The vast majority, or more ​than 9,000, were among people aged 65 and above, according to data published by ‌EuroMOMO, a network backed by the European Centre for Disease Prevention and Control and the World Health Organization (WHO).

Extreme heat can kill by causing heat stroke or aggravating cardiovascular and respiratory diseases, with older people among the most ​vulnerable.

The rise in air temperatures has also renewed debate about air conditioning (AC) systems in Europe, with ACs now seen as an essential need during the summer months.

Investments in cooling solutions in many EU countries accelerated in residential and public buildings, workplaces, health care facilities, and educational institutions.

Consequently, European markets affected by heat waves increased orders for energy-efficient HVAC systems, including those from Türkiye.

Germany top market

Germany was the largest European market for Turkish HVAC exports in June, totaling $71.4 million, up 19.9% year-over-year, according to data compiled by Anadolu Agency (AA) from the Türkiye Exporters Assembly (TIM).

Germany was followed by Italy, where exports rose 35.1% to $30.5 million, France, up 46.3% to $28.3 million, Poland, where exports increased 10.3% to $23.7 million, and Spain, where they rose 29.3% to $23 million, the data showed.

Finland recorded the largest increase in Turkish HVAC exports at a whopping 130.7% surge, followed by Croatia with 97.3%, Latvia with 96.1%, Luxembourg with 83.6%, and Malta with 74%.

Osman Baştaş, chair of the Turkish HVAC-R Exporters Association (ISIB), told AA that rising exports confirmed the Turkish climate control industry’s strong position and competitive edge in global markets, due to demand particularly driven by the EU, as well as by the Middle East, North Africa, and Central Asia.

Baştaş said promotional campaigns targeting the U.S. and other alternative markets also had a positive impact on the sector’s exports.

“Turkish manufacturers gained a massive advantage in global markets thanks to high-quality production, flexible manufacturing capabilities, fast delivery, and a robust engineering infrastructure,” he said.

“The restructuring process in supply chains presented great opportunities for our sector due to Türkiye’s geographical proximity to Europe.”

Rising demand

Baştaş said Turkish firms achieved this success thanks to green transition investments, which have become “key competitive criteria.”

“The demand in many markets, especially in Europe, is rising rapidly for systems that are energy-efficient with a low carbon footprint and pro-environment refrigerants, something Turkish firms have been investing in for quite some time, and we expect the impact of the green transition to drive exports even further in the coming period,” he said.

Baştaş also stated that the effects of climate change have rendered climate control systems a basic necessity, not only for residential buildings but also for shopping malls, hospitals, hotels, factories, logistics warehouses, and especially artificial intelligence (AI) data centers.

“Data centers became a growing sector as AI and digitalization gained momentum, and the demand for advanced, energy-efficient HVAC systems that provide precise temperature and humidity control in these facilities is rising day by day,” he said.

“Türkiye is among those benefiting most from this transition as we see rising export demand for high-energy-efficient HVAC systems, heat pumps, ventilation equipment, heat recovery systems, automation solutions, industrial cooling systems, and data center cooling technologies,” he added.

Baştaş stated that Türkiye has become one of the world’s leading HVAC manufacturing hubs thanks to its wide product range, robust supporting industries, high production capacity, price advantage and compliance with international standards.

“Many global brands operating in developed markets are manufacturing in Türkiye, underscoring the sector’s global credibility,” he said.

He said the sector’s export performance in the first half of the year had fueled optimism in the sector for the second half, while signs such as the normalization of inventories in Europe, ongoing energy efficiency investments, and rising temperatures driving up demand for air conditioners are supporting the sector.

“We think the growth will continue in the second half as long as the current order flow and export performance are maintained,” he said.

“We also aim to raise our share in the export of high-value-added, energy-efficient, and sustainable products, and we think the rise of the Turkish HVAC industry in the global market will continue in the coming years,” he concluded.

Iraq has requested that the capacity of the Kirkuk-Ceyhan oil pipeline be nearly four times its current flows under a proposed one-year interim agreement with Türkiye, Energy Minister Alparslan Bayraktar said Monday.

The decades-old pact that ​governed exports through the Iraq-Türkiye Crude Oil Pipeline is due to ​expire on July 27. Bayraktar said last week that the sides are set to sign a ​12-month agreement in the coming days to keep the pipeline open.

Türkiye had submitted a draft of a new long-term agreement to Baghdad, but negotiations had been delayed amid Iraq’s elections and the formation of a new government.

Bayraktar said the process had made it unlikely that a comprehensive deal could be concluded before the current pact expires.

“As an interim solution, we proposed signing a one-year oil transportation agreement … so that flows do not stop on July 27,” he told reporters after a Cabinet meeting.

He said the Iraqi side requested capacity of 750,000 barrels per day (bpd), compared with current volumes that stand at around 180,000 to 200,000 barrels per day.

“We said, ‘That’s fine, we will allocate 750,000 barrels per day to you.’ Within that year, we want to sign a new and more comprehensive Iraq-Türkiye Crude Oil Pipeline agreement,” he said.

Bayraktar said he discussed broader energy cooperation with Iraqi Prime Minister Ali al-Zaydi during a visit to Baghdad last week, including the extension of the pipeline to Iraq’s southern oil hub of Basra and increasing its capacity to 2.5 million barrels per day.

He said Türkiye proposed opening the route to additional regional crude supplies.

“We said that if Kuwait wants to ship its oil through this pipeline, it should be able to do so. If others in the Gulf want to use it, they can as well,” Bayraktar said.

“We also discussed building a natural gas pipeline alongside it so Qatari gas or other regional gas sources could be transported,” he added.

The Kirkuk-Ceyhan pipeline has been at the center of a long-running legal dispute between Türkiye and Iraq. A Paris-based arbitration court ruled for Ankara to pay $1.5 billion over what it said were unauthorized exports by Iraq’s Kurdistan Regional Government (KRG) between 2014 and 2018.

Türkiye, on the other hand, said the International Chamber of Commerce (ICC) had recognized most of Ankara’s demands.

Bayraktar said enforcement proceedings continue in Washington, where reciprocal claims and accrued interest will be calculated before determining whether either side owes compensation.

“There will be calculations, including interest, because our claims also date back many years. Once that is completed, the 2014-2018 period will be closed,” he said, adding that arbitration covering the period after 2018 remains ongoing.

He said the arbitration cases would form part of broader negotiations with Iraq and that several issues related to the proposed one-year agreement have yet to be resolved, while stressing Türkiye is ready to proceed once the remaining issues are settled.

Türkiye halted oil flows through the pipeline following the devastating February 2023 earthquakes, citing damage to the infrastructure. Operations resumed after repair work in September 2025.

However, exports were temporarily disrupted again during the Iran conflict before restarting on March 18.

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Türkiye’s exports to the European Union surged 4.7% to $54.5 billion (TL 2.56 trillion) in the January-June period as the bloc shifted its supply chains to more reliable and closer regions during the Middle East crisis, a head of a leading commercial chamber said.

The Turkish auto sector accounted for most of the exports to the EU in the first half of the year, with $15.57 billion, according to the Türkiye Exporters Assembly (TIM).

The auto industry was followed by chemicals and chemical products at $7.1 billion, ready-to-wear fashion and apparel at $4.7 billion, and ferrous and non-ferrous metals at $4.18 billion.

Germany was the recipient of the largest Turkish exports in January through June, with $10.1 billion, up 4.3%, followed by Italy with $6.8 billion, Spain with $5.6 billion, France with $5.3 billion, and Romania with $3.7 billion.

Exports from Istanbul, the largest source of exports in the first six months of the year, to Germany totaled $3.8 billion. While Germany received the most exports from Istanbul, the country was followed by Italy, Spain, France and the Netherlands, the data showed.

Romania continued to rank among the top five EU countries that were also the largest recipients of Turkish exports, while exports from Istanbul to the country reached $1.2 billion.

Türkiye and the EU’s economic relations have grown over the years, with mutual trade volume, investment flows and product integration.

The EU is Türkiye’s largest export market and a key market for Turkish manufacturers, especially those operating in sectors such as automotive, machinery, chemicals, textiles and home appliances.

The ongoing restructuring of global supply chains is further elevating Türkiye’s potential to become a reliable production and supply hub for Europe, while factors such as the green and digital transformation, the need to diversify supply chains, and the potential updating of the customs union could further deepen trade integration between Türkiye and the EU.

Şekib Avdagiç, president of the Istanbul Chamber of Commerce (ITO), told Anadolu Agency (AA) recently that European countries were shifting their supply chains to nearby, more reliable regions, making Türkiye “a natural hub for production and exports,” as the world was going through a challenging and uncertain period.

‘New global order’

“Türkiye-EU relations must be addressed with a new approach just as political and economic developments around the globe are shaping a new global order,” he said.

Avdagiç said Europe was restructuring not only its military deterrence but also its industrial capacity, supply chain resilience, and technological independence in this climate, while the bloc’s security and economic infrastructure had become increasingly intertwined.

He said Europe aimed to reduce its foreign dependence on defense and advanced manufacturing technologies, which, Avdagiç said, some member states might not prefer to acknowledge, leading to more selective and controlled technology-sharing models with Türkiye.

“The energy security aspect of Türkiye’s relationship with Europe is also one of the most critical layers as Türkiye stands out as a sort of transit country and a regional energy distribution hub, facilitating energy flows,” he said.

“The flow of energy from the Eastern Mediterranean, the Caspian Sea, and the Middle East to European markets has become a component of geopolitical stability, which has driven Türkiye-EU relations beyond the traditional foreign policy framework into a multilayered, strategic structure.”

“This structure, through an evolving base of security, economic, and industrial policies, is shaped not only by short-term needs but also by a foundation of structural interdependence,” he added.

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The South Korean government lifted its 2026 growth forecast by one percentage point to 3% on Tuesday, expecting a stronger performance driven by upbeat performances from major memory chipmakers as artificial intelligence demand soars.

Record profits from semiconductor giants Samsung Electronics and SK Hynix – whose advanced memory chips are essential for the fast-evolving AI sector – have fuelled optimism over the country’s economic outlook.

The government has unveiled an ambitious economic agenda and has said it plans to invest an expected windfall from tech giants’ taxes into public projects.

“We had initially projected this year’s real economic growth rate at 2%, but we have now revised our forecast upward to 3%,” Finance Minister Koo Yun-cheol told a Cabinet meeting Tuesday.

“Although exchange rate fluctuations could affect the outcome, per capita income is projected to remain around the $40,000 mark,” Koo added.

In a presentation slide shown during the meeting, the finance ministry called the strong semiconductor market a “boon for the economic indicators.”

However, an agile policy response is needed to address “changed economic situations, including widening wealth polarization,” the slide said.

SK Hynix and Samsung are involved in a public-private investment of 800 trillion won ($540 billion) to build a chip hub in southwest South Korea – part of broader efforts to address regional inequality.

Tuesday’s Cabinet meeting also flagged high exchange rates, interest rates and consumer prices as risks amid the continuing Middle East conflict.

President Lee Jae Myung had said on Monday that higher tax revenues, thanks to AI-driven profits, were a “golden window” of opportunity to invest strategically.

The windfall will be used to establish a “future response fund” to concentrate investment in “future industries, youth, regional development, and education,” Lee said, without giving further details.

The boom has also strengthened workers’ demands for higher pay, with Samsung Electronics avoiding a major strike in May after reaching an agreement on bonuses.

Three companies dominate the market for producing advanced memory chips: U.S. giant Micron, and South Korea’s Samsung Electronics and SK Hynix.

These chips, called high-bandwidth memory (HBM), are used in AI processors alongside powerful silicon known as GPUs to generate chatbot responses or realistic images.

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China’s exports once again topped expectations with official data on Tuesday indicating that the continued global AI boom helped boost demand for chips and computing equipment from the world’s second-largest economy in June.

The figures came despite global trade disruptions caused by the U.S.-Israeli war on Iran, providing a much-needed boost to China, which is increasingly reliant on exports to fuel growth.

Overseas shipments rose 27.0% year-over-year, beating the 19.0% forecast in a Bloomberg survey of economists.

The General Administration of Customs data also showed imports soared 36.0%, easily outstripping the 26.1% estimated in the Bloomberg survey, and well up from the 27.4% jump seen in May.

“Trade values took another big leg up in June. This predominantly reflects the recent surge in semiconductor prices on the back of the AI boom,” Julian Evans-Pritchard, of Capital Economics, said in a note.

The value of China’s semiconductor exports more than doubled from the same month a year ago and rose $2.7 billion from May, while data processing equipment shipments also rose 53.1% from a year earlier.

But that expansion was “entirely a price story caused by the ongoing shortage of memory chips,” Evans-Pritchard said, noting that the volume of semiconductor exports actually fell year-over-year in June.

“Surging semiconductor prices are playing a key role in pushing up import values,” rather than domestic consumption surging, he said.

Automobile exports, meanwhile, jumped 69.6% year-over-year, reflecting strong demand for Chinese electric vehicles, he added.

Shipments to the U.S. rose 13.9% to $43.5 billion, putting China’s trade surplus with its superpower rival at $28.9 billion.

Ties between Washington and Beijing have stabilized since U.S. President Donald Trump visited Beijing in May, but the persistent trade imbalance remains a source of friction between the two.

China is also locked in a simmering trade feud with the European Union, with which it recorded a trade surplus of $32.9 billion in June, a rise from $30.7 billion in May.

June’s data “showcases the competitiveness and resilience of China’s manufacturing sector,” Zhang Zhiwei, of Pinpoint Asset Management, wrote in a note.

“It also puts further pressure on the trade tension between China and its trading partners, Europe in particular,” he said.

The volume of rare earths exports was down 34% last month and 6.4% on an annual basis in the first six months of the year as Beijing tightened restrictions on the critical elements.

China accounts for around two-thirds of the total global production of the minerals, which are used to make everything from smartphones to missiles, and has wielded its dominance in the sector as a weapon in trade wars with the West.

China’s overall trade surplus hit $126 billion last month, up from $105 billion in May, a gap that is worrying for European economies and other governments.

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The U.S. central bank should stand ready to hike interest rates in the near-term if inflation remains above target, the bank’s top official said Monday.

“When inflation is well above its target and the labor market is near full employment and stable, any serious policy rule calls for raising the policy rate to bring down inflation,” a member of the Federal Reserve (Fed) Board of Governors, Christopher Waller, said at an address in Rome.

Waller said Tuesday’s consumer price index (CPI) report will be important.

“If we get another hot reading on core inflation this week, then the (Fed) will need to consider tightening monetary policy in the near term,” he said.

The stance is in line with remarks from newly installed Fed Chair Kevin Warsh, who vowed at his first press conference as head that the central bank would achieve price stability.

Waller noted that the 12-month personal consumption expenditures rate in May stood at 3.4%, well above the Fed’s 2% target.

The Fed “has to be ready to tighten monetary policy to prevent a repeat of the 2021-to-2022 inflation episode,” Waller said.

“Sternly staring at inflation until it melts before our withering gaze is not an option.”

Waller said he was aware of the need to avoid “overtightening” and risking a recession, but that dynamics in the labor market and with inflation point policymakers in a clear direction.

“Unless I see evidence of a significantly weakening labor market, my focus will be on inflation,” Waller said.

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