Economy
Türkiye, Belgium push for stronger defense, trade, investment links
Top Turkish and Belgian officials on Monday highlighted “significant” opportunities to deepen economic cooperation in defense, technology, logistics and green energy, while reaffirming their goal of significantly increasing bilateral trade.
The remarks came during a business forum in Istanbul attended by more than 400 private-sector representatives as part of an economic mission led by Belgium’s Queen Mathilde. Turkish Trade Minister Ömer Bolat has described it as the largest international delegation visit to Türkiye to date.
Queen Mathilde, later Monday, was received by President Recep Tayyip Erdoğan, who said recent regional developments have once again highlighted the geopolitical importance of Türkiye-EU relations, according to a statement released by the Communications Directorate.
During the talks that covered bilateral relations as well as regional and global issues, Erdoğan also stressed updating the customs union in line with current conditions is “a key area necessitating swift progress” on the path toward Türkiye’s full EU membership.
At the forum, officials highlighted opportunities to expand cooperation in areas including defense, technology, green transition and logistics. They also emphasized the importance of modernizing the Türkiye-EU Customs Union and Türkiye’s role as a production and logistics hub for European markets.
The delegation also included Belgian Deputy Prime Minister and Foreign Minister Maxime Prevot and Defense Minister Theo Francken, who is also responsible for foreign trade.
The bilateral trade volume between Türkiye and Belgium reached $9.2 billion in 2025, including $5 billion in Turkish exports and $4.2 billion in imports.
Turkish Trade Minister Bolat said the two countries are aiming to increase the volume to $15 billion in the near term.
He added that priorities include strengthening the legal and business framework through agreements on investment protection, investment promotion and the avoidance of double taxation, ensuring transparency, predictability and security for investors.
Belgian investments in Türkiye totaled $9.3 billion between 2002 and January 2026, while Turkish investments in Belgium amounted to $490 million.
Bolat said 719 Belgian companies currently operate in Türkiye, while Turkish companies are expanding in Belgium across logistics, defense, manufacturing, retail and advanced technologies.
The economic mission is regarded as one of Belgium’s most significant economic diplomacy initiatives with a strong political dimension.
It typically features a range of events centered on key sectors of bilateral economic relations with the host country and aims to promote concrete cooperation opportunities.
Belgium last organized an economic mission to Türkiye in 2012, when the visit was led by King Philippe, then crown prince.
Bolat underscored the sides’ intention to deepen cooperation in strategic sectors, including defense, logistics, energy, technology and advanced manufacturing.
Citing geopolitical tensions, supply chain disruptions and rising protectionism, Bolat described Türkiye as a strategic production and logistics hub connecting Europe, Asia and Africa, offering direct access to a market of more than 1.3 billion consumers.
He highlighted Türkiye’s economic scale, noting its $1.6 trillion economy, young workforce and expanding industrial base. “Türkiye has become a global production, technology and logistics center,” he said.
Highlight on defense
Defense was highlighted as one of the strongest growth areas in bilateral cooperation.
Erdoğan told Mathilde that Türkiye’s participation in the EU’s defense initiatives is in the mutual interest of all sides, the statement said.
The president further said Türkiye and Belgium hold significant potential for cooperation in a broad range of fields, including trade, the defense industry, energy and agriculture, adding that efforts to further strengthen bilateral ties would continue.
He added that the green energy transition represents an important area of cooperation with Belgium, emphasizing that Türkiye is among Europe’s leading countries in installed renewable energy capacity.
The delegation on Sunday visited the Turkish drone powerhouse Baykar, which Belgium’s Francken described as “unique” within NATO because “it has made permanent innovation its mantra.”
“This company pioneered AI-integrated armed drones. They are getting higher and flying higher and further,” Francken wrote on the social media platform X.
Bolat said Türkiye’s defense and aerospace exports rose from $248 million in 2002 to more than $10 billion in 2025, a nearly 40-fold increase that has positioned the country as the world’s 11th-largest defense exporter.
“We see growing interest from Belgium in deeper engagement with our defense ecosystem,” he said.
Customs union update
He also emphasized logistics as another major area of opportunity, citing Türkiye’s $150 billion logistics market and more than $50 billion in logistics service exports.
Türkiye’s transportation infrastructure includes 58 airports and flight connections to 356 destinations, while weekly connectivity between Türkiye and Belgium includes 80 passenger flights and 14 cargo flights, according to Bolat.
More than 600,000 Belgian tourists visited Türkiye last year, he added.
Bolat identified information technologies, pharmaceuticals and clean energy as additional areas where bilateral cooperation could deepen.
He said Türkiye’s energy transition strategy, particularly in offshore wind and hydrogen technologies, presents opportunities for collaboration with Belgian firms.
Bolat also called on the EU to modernize the customs union to support integrated value chains between European and Turkish companies.
“We are working very closely on updating the customs union in line with today’s economic realities,” he said.
Türkiye’s annual trade volume with the EU has reached $233 billion, while nearly 70% of the $290 billion in foreign direct investment entering Türkiye since the early 2000s has originated from European firms, he noted.
As part of the forum, Bolat, Prevot and Francken signed a joint declaration aimed at strengthening bilateral trade relations.
In his speech, Prevot underlined the importance of the EU-Türkiye Customs Union in connecting Turkish industry to European value chains, while stressing that trade was “only one part of the story.”
He said Belgium and Türkiye have “highly complementary strengths” in multiple sectors, including energy, aerospace, defense, logistics, biotechnology and life sciences.
He added that bilateral ties “are built on nearly two centuries of political, diplomatic and economic cooperation.” According to Prevot, existing ties are already strong, but further potential remains in innovation, research and industrial collaboration.
Economic powerhouse
Meanwhile, Turkish Investment and Finance Office head Ahmet Burak Dağlıoğlu said Türkiye has maintained a reform-driven agenda since 2003, regularly updating investment policies and improving the business climate.
“Every 18 to 24 months, we prepare and implement a new reform agenda, gather private sector feedback and launch the next phase of reforms,” Dağlıoğlu said.
“Türkiye is a resilient and fast-growing economy,” he said, noting the country has recorded compound annual growth of 5.3% since 2003.
Dağlıoğlu said Türkiye’s strategic location has turned the country into a major connectivity and logistics hub linking three continents.
Massive infrastructure investments have transformed Türkiye from a regional bridge into a global economic powerhouse, he added.
He also noted that the government recently announced a new package of financial and non-financial investment incentives.
Complementary strengths
Addressing the event, Foreign Economic Relations Board (DEIK) President Nail Olpak said Türkiye and Belgium have complementary economic strengths.
“Belgium is home to world-class companies in pharmaceuticals, chemicals, logistics, high-tech manufacturing and defense,” he noted.
Olpak cited Türkiye’s economic strength in production, technology and research and development, with its role as a global trade hub and consumer market of 86 million people.
He said the green transition presents significant opportunities for cooperation, combining Belgian sustainability expertise with Türkiye’s rapidly growing renewable energy sector.
He also highlighted the potential for cooperation between Belgian high-tech companies and Türkiye’s expanding startup ecosystem.
According to Olpak, defense industry cooperation remains an important and logical area for both countries.
“We all witness that today’s only certainty is uncertainty, which we businesspeople never like,” he said. “The idea of free trade has been transferred to economic blocs as well as political blocs.”
Türkiye’s more than 60-year EU partnership journey should now be viewed from a new perspective, Olpak stressed.
Money leaving the investment funds now being liquidated in Türkiye has largely moved into bank deposits, the country’s central bank chief said Tuesday, adding that the risk of the turmoil spreading to the wider financial system remained limited so far.
Regulators last month ordered the liquidation of over 130 investment funds managed by seven asset managers following warnings by some that they could not meet redemption payments.
Authorities have widened their investigation into suspected market manipulation in stocks and fund markets. Eighty-five suspects have been arrested so far in the probe, Justice Minister Akın Gürlek said Tuesday.
The funds ordered to be wound down had reached more than $20 billion in assets over just three years. About half a million investors have been affected.
There have been sharp outflows from funds undergoing liquidation, and part of it came from foreign-resident investors, Central Bank of the Republic of Türkiye (CBRT) Governor Fatih Karahan said Tuesday.
He was answering lawmakers’ questions at Parliament’s Planning and Budget Commission.
For domestic residents, Karahan said, where the money goes matters for dollarization.
“We see that a significant portion of this amount has moved into deposits,” he said. He added that total commercial and savings deposits rose by more than TL 800 billion ($16.27 billion) over the same period.
Karahan said there had also been outflows from foreign-currency funds, and that some of that money could be expected to flow into foreign-currency deposit accounts. Even so, he said, overall deposit preferences were in line with the current Turkish lira share.
He put the lira share of investment funds at about 61% to 61.4%, and said it was holding steady.
Connection to wider system ‘weak’
Karahan said the link between the funds in liquidation and the rest of the financial system was critical for assessing contagion risk, and that current data pointed to a weak connection.
“We can say that the shift toward the Turkish lira in the financial system is continuing in some form, at least based on the data we have at the moment,” Karahan said.
He credited coordinated measures by the central bank and other institutions for keeping the risk of contagion limited so far.
He said the impact so far was mostly confined to the portfolio management companies concerned and their investors.
“We assess that the contagion risk is under control based on the data,” Karahan said. “But this does not mean everything is over. If we see the need, we will continue to take the necessary steps in every way.”
He said there had been a risk of volatility and disruption in lira markets, which was why a number of measures had been taken.
3 areas to watch
Karahan said the liquidation process was only at its start, and that a firm assessment of its macroeconomic effects would need to wait to see how it unfolds.
He said the central bank would track the impact in three areas: wealth, reserves and the real sector.
Karahan said financial wealth could decline somewhat, but that the effect on spending was expected to be smaller than that of the recent fall in gold prices.
For reserves, he said, what matters is where investors leaving the funds put their money. So far the data show a strong preference for the lira.
The third area is indirect effects through household and corporate balance sheets. Karahan said the central bank’s first analyses showed that real sector companies hold only a limited share of the liquidated funds, and that these are mostly large firms with strong liquid assets.
Any balance-sheet impact would therefore be expected to feed less strongly into the real economy. He stressed that these were initial findings and would be updated as data come in.
Cautious stance to continue
In his presentation before the commission, Karahan also said that disinflation is expected to regain momentum provided that supply pressures ease
He stressed that the bank would keep a cautious monetary policy to preserve gains achieved so far in lowering inflation.
Türkiye’s annual inflation dipped below 30% for the first time in almost five years in September, official data showed Monday.
Consumer price growth eased more than expected to 29.73% from 31.51% in August.
That marked the fourth consecutive month of decline, after the downward trend that started in mid-2024 stalled earlier this year following a sharp rise in energy prices caused by the Iran war.
Monthly price growth also came in below expectations at 1.84%, the same as in August.
Some analysts said the September reading raises the prospect of an interest rate cut at the Oct. 22 meeting.
The bank has kept its benchmark one-week repo rate at 37% this year, as it monitored the inflation impact of the Iran war.
Karahan said a slowdown in the disinflation process had been caused by war-related energy price volatility. But he added that “the main trend in inflation remains below annual inflation,” signaling that disinflation would continue if supply pressures fade.
He noted that upside risks to energy prices are being evaluated and that tight policy is seen as important in limiting the inflationary impact of supply shocks.
Karahan said a weaker-than-expected improvement in inflation expectations poses a risk to the disinflation process.
On the other hand, a slowdown in services inflation is continuing despite supply shocks, with weaker domestic demand also contributing, he noted.
Leading indicators show that a slowdown in rent inflation is expected to continue, Karahan said.
A slowdown in domestic demand has become marked, with indicators confirming a weakening of consumption activity, he noted.
Karahan also said the current account deficit-to-GDP ratio in 2026 is seen below long-term averages.
Türkiye’s combined electricity generation from solar and wind sources reached a record 9.9 billion kilowatt-hours (kWh) in August, the highest level on record, according to the Energy and Natural Resources Ministry.
Solar power generation stood at 5.16 billion kWh in August, while wind generation reached 4.74 billion kWh, the ministry said Tuesday.
Solar accounted for 14.1% of total electricity generation during the month, while wind’s share was 12.9%. Combined, the two sources generated a record 9.9 billion kWh.
Hydropower remains largest source
Türkiye generated 36.71 billion kWh of electricity in August, with hydropower maintaining its position as the largest source.
Hydropower accounted for 24.7% of total generation, producing 9.08 billion kWh during the month.
Renewable sources accounted for 56.4% of total generation, at 20.7 billion kWh, while domestic sources accounted for 69.7%, or 25.58 billion kWh.
Daily electricity generation also reached its highest level of the year so far in August. The daily record was set on Aug. 13, when generation reached 1,241,291 megawatt-hours.
Domestic generation reaches record share
During the January-August period, hydropower generation reached 75.2 billion kWh, wind generation 30.4 billion kWh and solar generation 29.8 billion kWh, marking the highest levels recorded for the corresponding period since 2000.
Domestic sources accounted for 73.2% of electricity generation during the period, producing 181.8 billion kWh. Both the volume and share were the highest for the corresponding period since 2000.
Renewable sources accounted for 60.3% of generation, at 149.8 billion kWh, also representing the highest volume and share for the corresponding period since 2000.
Energy and Natural Resources Minister Alparslan Bayraktar said Türkiye aimed to build a strong energy infrastructure through long-term investments in renewable energy.
“Our long-term investments in renewable energy infrastructure continue to translate into record generation figures,” Bayraktar said.
“Our goal is not only to meet today’s energy demand, but to build a strong, sustainable and innovative infrastructure that is completely free from external dependence,” he said.
Bayraktar added that Türkiye would continue integrating its substantial solar and wind potential into the grid using advanced technologies as it pursues its goal of achieving full energy independence.
Justice Minister Akın Gürlek said Tuesday that 85 suspects had been arrested so far in the investigation into Türkiye’s fund turmoil, and that five people had already handed back money they made through what he called “unjust gains.”
Gürlek said authorities would recover such profits from others who made them through market manipulation.
Regulators last month ordered the liquidation of over 130 investment funds managed by seven asset managers following warnings by some that they could not meet redemption payments.
Authorities have widened their investigation into suspected market manipulation in stocks and fund markets.
Legal action has been taken against 207 people in total, with measures imposed on the assets of many of them, Gürlek told Anadolu Agency (AA).
The funds ordered to be wound down had reached more than $20 billion in assets over just three years. About half a million investors have been affected.
Türkiye’s Savings Deposit Insurance Fund (TMSF) has opened accounts for investors seeking to return what authorities describe as “excessive gains” from fund sales.
Gürlek said five people had returned their unjust gains so far. Reports said among them was Fatma Betül Sayan Kaya, who resigned as a deputy chair of the ruling Justice and Development Party (AK Party) after she and her husband were alleged to have made substantial profits trading shares ahead of the turmoil.
Profits made by people who earned excessive gains over a short period would be transferred to a fund set up within the TMSF, the minister said.
“We will pursue our rights to the end within the framework of the law,” Gürlek said.
Gürlek drew a line between two kinds of earnings. Legitimate profit, he said, comes from citizens putting their savings into stocks and the stock market. The other kind came from so-called “bubble” stocks, where traders made abnormal profits by moving in and out quickly.
He said investigators had found that some people in closed and open funds had acted on tips and inside information, and used manipulative trades to make “extraordinary” profits over a short time.
He said the Istanbul Chief Prosecutor’s Office, working with data from the Capital Markets Board (SPK), Borsa Istanbul Stock Exchange and the Central Registry Agency, had frozen the assets of people who made abnormal gains.
Some of them had been arrested, he said, and others had fled. He said the process was continuing.
Gürlek said his ministry first noticed unusual movement in some funds and shares in February 2025 and wrote to the SPK about it. Citizens’ complaints then increased sharply in August 2026. Permission to investigate was granted later that month, he said.
Gürlek said the State Supervisory Council (DDK) had been tasked with examining whether any public institutions were negligent.
He said the Turkish market and economy were very strong and that a problem in a small part of the market should not be generalized.
The U.S. trade deficit surged more than analysts expected in August, government data showed Tuesday, hovering at its widest level since March 2025, driven by imports of oil and advanced tech products like chips.
The trade gap in the world’s biggest economy jumped 13.7% to $105.6 billion, according to Commerce Department data.
This was larger than the $102 billion projected in a consensus forecast released by MarketWatch.
U.S. trade flows have swung significantly since President Donald Trump returned to the White House in January 2025, as businesses rushed to get ahead of his sweeping, and fast-changing tariffs on trading partners.
The latest figures, which are adjusted for seasonality but not inflation, also reflect a surge in global energy prices from the war in the Middle East.
U.S.-Israel strikes targeting Iran in late February had triggered Tehran’s response in blocking the Strait of Hormuz, a key waterway for energy transport, which sent oil prices soaring.
Both sides remain locked in conflict.
In August, U.S. imports rose by 4.3% to $420.8 billion, driven by crude oil, gold, semiconductors and industrial machinery.
U.S. exports climbed by 1.4% to $315.2 billion, partially driven by energy exports too.
German factory orders dropped sharply in August, more than forecasted, as large-scale orders for aircraft, ships, trains and military vehicles declined, official data showed Tuesday, underscoring the fragility of a recovery in Europe’s biggest economy.
New orders, a key indicator of future business activity, were down 10.6% from a month earlier due to a drop in large-scale domestic orders, according to provisional data from Destatis.
It was the first decline in four months and more than the 1% decrease forecast by analysts surveyed by the financial data firm FactSet and Reuters.
The long-stagnant German economy has been slowly recovering on the back of massive public spending, with some recent data generally pointing to signs of growing strength.
The economy ministry said August’s order data thus represented a “marked setback.”
The decline was entirely attributable to a 61.5% slump in what the statistics office classifies as “other transport equipment,” a category that more than doubled in July due to an exceptionally high volume of large-scale orders of ships, railway rolling stock and aircraft.
When large-scale orders are excluded, new orders in August were 0.1% lower than in the previous month.
Weak figures likely to drag on Q3 growth
The weak figures suggest industry will weigh on third-quarter economic growth after helping to drive expansion in the first half of 2026, although analysts expect a rebound in the fourth quarter as government contracts pick up.
The German economy grew by 0.3% in the second quarter, prompting the government to raise its full-year forecast to 1.3%.
Much of the momentum seen in German industry so far this year has been driven by defense spending.
“Excluding these highly volatile large orders, bookings in the manufacturing sector have been treading water for months,” said Jupp Zenze, economic expert at the German Chamber of Commerce and Industry.
“Broad-based economic momentum remains absent.”
Economist points to full order books
The three-month comparison, which strips out some of the month-on-month volatility, showed that new orders in the period from June to August were 1.3% higher than in the previous three months.
Based on the figures available so far, the industrial sector likely slowed growth of the German economy in the third quarter, in contrast to the first half of the year, said Commerzbank senior economist Ralph Solveen.
However, Solveen expects this trend to reverse in the fourth quarter, as the government is likely to issue more contracts, which should have a positive long-term impact on sales and production.
“This outlook is also supported by the significant improvement in business sentiment over the past few months,” he said.
After revision of provisional data, new orders in July increased by 3.2% compared with the previous month, up from the previously estimated 2.5%.
According to the latest data from July, the order backlog provided coverage for a record nine months, said Marc Schattenberg, economist at Deutsche Bank.
“The disappointingly weak August figures should be viewed in the context of already very full order books,” Schattenberg said.
Foreign orders were down 5.4% in August on the month, with orders from the euro zone registering a decline of 5.4% and orders from outside the eurozone decreasing by 5.5%. Domestic orders declined by 17.3% on the month.
Spain’s government on Tuesday approved emergency measures to address the housing crisis, after an outbreak of violence in the coastal city of Barcelona the previous night that drew tens of thousands of people into the streets.
The Barcelona turmoil late on Monday followed protests across the country over the weekend that demanded measures to resolve a crisis sparked by the eviction of an 87-year-old woman in Madrid, the country’s capital.
In Barcelona, Spain’s second-largest city, a severe weather alert over the weekend had forced organizers to reschedule the protest for Monday. What began as a massive peaceful march turned violent when groups of hundreds of hardcore activists clashed with police, throwing stones and setting fire to trash containers.
Prime Minister Pedro Sanchez’s government approved measures similar to those rejected by Parliament last Friday, which prompted his call for early elections on Nov. 29. The measures will be sent for ratification by an interim legislature, which remains active until the elections.
The smaller, interim legislature – known as “permanent commission” – is composed of 69 members, compared to the 350 that sit in the regular Parliament.
Alejandro Quiroga, professor of political science at Madrid’s Complutense University, said the maneuver of having decrees approved by the interim legislature was constitutional but also a necessary political move by Sanchez.
“I don’t think Sanchez had an alternative,” Quiroga told the Associated Press (AP). “If you are calling early elections so you can keep the public’s focus on housing, you can’t just sit back and do nothing about it. That wouldn’t have been smart.”
The new measures are to extend protection against evictions for vulnerable Spaniards until 2030, regulate room rentals, impose a new tax on seasonal rentals, ban speculative real estate purchases and give tax breaks to landlords, Housing Minister Isabel Rodriguez told reporters last week.
Rising costs and a housing shortage are pricing many Spaniards out of the housing market, despite strong economic growth in Europe’s fourth-largest economy.
The protesters have been demanding stronger protections for tenants, measures to combat fraud and a ban on evictions when alternative housing is unavailable.
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