Economy
Türkiye reaffirms reform agenda to boost investment, competitiveness
Türkiye will continue implementing structural reforms aimed at boosting production capacity, competitiveness and export diversification in line with the government’s medium-term program, a statement said on Monday.
The statement came following a meeting by the Economic Coordination Board (EKK), which said the government’s economic road map has strengthened macroeconomic fundamentals, making the economy more resilient, competitive and better positioned to adapt to changing global conditions, including the Middle East conflict.
Chaired by Vice President Cevdet Yılmaz, the EKK includes ministers of finance, trade, labor, energy, industry, and agriculture, along with senior officials from other key economic institutions, including the central bank.
The board said Türkiye has maintained uninterrupted economic growth for 23 consecutive quarters despite multiple external shocks, while the unemployment rate has remained in single digits.
“The budget balance continues to follow a path consistent with program targets, while Türkiye’s risk premium (CDS) has approached pre-conflict levels,” the statement said.
The Middle East conflict, triggered by U.S. and Israeli airstrikes on Iran, effectively shut the key Strait of Hormuz, sending energy prices sharply higher.
That came as a challenge for countries that rely on imports to meet their energy needs, including Türkiye.
The board said rising prices were creating pressure on inflation and the current account balance, but stressed relevant institutions were implementing “timely and effective” measures to limit the impact.
During the meeting, officials reviewed the implementation status of structural reform measures under the 2026-2028 medium-term program and discussed additional steps to accelerate progress.
Against a backdrop of heightened global uncertainty, geopolitical risks and rapid technological transformation, the statement said Türkiye is well-positioned to capitalize on emerging opportunities thanks to its strong macroeconomic foundations and diversified policy framework.
The EKK reiterated its commitment to structural reforms that improve the business and investment environment, strengthen production capacity, enhance competitiveness and support export diversification.
It also highlighted ongoing efforts to accelerate industrial transformation, strengthen research and development, innovation and technology-focused production, and advance green and digital transformation initiatives.
The statement emphasized that simplifying bureaucratic procedures, improving access to qualified labor, facilitating work permit processes and ensuring a predictable investment climate are becoming increasingly important as global competition for investment intensifies.
As part of the “Strong Hub for Investments in the Century of Türkiye Program,” authorities plan to gradually expand the “One-Stop Office” model, currently operating at the Istanbul Financial Center, across the country to provide investors with faster and more efficient services.
Officials further assessed progress in the One-Stop Office initiative and outlined measures to ensure investors can access permits, licenses and other administrative procedures through a single platform.
The board also evaluated labor market developments and considered policies aimed at facilitating the employment of foreign workers in sectors facing labor shortages, while improving work permit procedures.
Employment in Türkiye’s construction sector reached a record this May, as urban renewal projects gathered pace across the country, particularly in Istanbul, according to official data.
The number of salaried employees in construction rose 1.2% year-over-year to 1.93 million in May, marking the highest level ever recorded for the month, according to data compiled from the Turkish Statistical Institute (TurkStat).
The sector added 22,576 workers compared with the same month a year earlier.
Across the broader economy, total salaried employment in the industrial, construction and trade-services sectors increased 0.5% annually to 15.97 million. Employment declined 3.2% in industry, while trade and services recorded a 2.3% increase.
Within construction, 1.27 million people were employed in building construction, 248,252 in civil engineering projects and 418,461 in specialized construction activities. Employment in those segments rose 1%, 4% and 0.1%, respectively.
Industry representatives attributed the record employment levels largely to accelerating urban transformation projects.
More than 276,000 independent housing units were undergoing urban renewal across Istanbul’s 39 districts as of July, which sector representatives say reflects continued momentum of redevelopment efforts.
Ali Hepşen, a professor at Istanbul University’s Faculty of Business, said the data indicated that activity in the sector remains resilient.
“This data shows that the recovery in the construction sector is continuing not only on the production side but also on the employment side,” Hepşen told Anadolu Agency (AA).
Emphasizing that attention should be paid to the fact that employment growth is occurring at different rates across various sub-sectors, Hepşen said, “While the 4% increase in nonbuilding construction reflects the impact of infrastructure and public investments, the 1% rise in building construction points to a more limited momentum.”
Meanwhile, the 0.1% increase in private construction activity indicates that a cautious outlook persists in certain areas of the sector, he added.
Hepşen said urban renewal projects, strong housing sales and reconstruction work in Türkiye’s earthquake-hit regions had been the main drivers supporting employment.
However, he added that tight financing conditions and slower-than-desired new housing supply continued to limit stronger job creation.
Engin Keçeli, chair of the Association of Constructors and Real Estate Developers (INDER), said production in the construction sector has accelerated compared to previous years, adding that both new projects and urban transformation had contributed to higher employment.
Keçeli noted that May and the other summer months are a period of intense activity for construction output.
“We are the most dynamic sector; we work nonstop. Right now is also the busiest time of year for us. The increase in the number of apartments for which building permits were issued was already an indication that construction activity would pick up. Employment data also confirmed this,” he said.
He also cited improved predictability in exchange rates and construction costs as factors encouraging developers to accelerate activity.
Indonesia’s central bank governor stepped down on Monday, in a surprise move that deepens uncertainty as the country grapples with a weakening currency and other economic woes brought on by the Middle East war.
President Prabowo Subianto has accepted the resignation of Perry Warjiyo, who had served as Bank Indonesia’s (BI) governor since 2018, State Secretary Prasetyo Hadi told reporters in Jakarta.
Warjiyo, whose second term was meant to expire in 2028, cited unspecified personal reasons for the surprise resignation, which he tendered on Saturday.
The bank’s senior deputy governor, Destry Damayanti, has been appointed interim governor, said Hadi.
The rupiah weakened as much as 0.36% to 18,000 to the U.S. dollar following the announcement, while the main stock index flipped between gains and losses in choppy trade.
The stock market and currency remained “quite stable” in the hours after the government announced Warjiyo’s resignation, Bank Central Asia chief economist David Sumual told Agence France-Presse (AFP).
But the move “may cast further policy uncertainty, which may not translate well to the rupiah and the economy in general.”
The rupiah has taken a battering from surging energy costs, shedding about 7% since the Middle East conflict erupted in February to become Asia’s worst-performing currency, according to financial outlet Bloomberg News.
BI surprised markets last week by keeping policy rates unchanged, instead offering new incentives to attract foreign capital inflows aimed at supporting the rupiah.
The bank has lifted its key interest rate by 100 basis points this year to 5.75% in an effort to shore up the rupiah.
Deni Friawan, a researcher at the Jakarta-based Center for Strategic and International Studies, said Warjiyo’s surprise resignation could spook investors.
“Markets dislike surprises,” he told AFP.
“When a central bank governor steps down unexpectedly, investors naturally question the future direction of monetary policy, inflation control, and exchange rate management.”
Replacement closely watched
Warjiyo, who started his career at BI in 1984, was first appointed as governor in 2018. He was reappointed for a second five-year term by Subianto’s predecessor in 2023.
Analysts say the choice of Warjiyo’s permanent replacement will be closely watched.
“Given the current environment of heightened uncertainty, policymaking experience and credibility should be key in picking a successor,” said Sumual.
To Friawan, “if the appointment is perceived as politically driven, investors may begin to question the institution’s credibility. And that is a far more serious risk than the resignation alone.”
The appointment of a new governor would involve both the president and the parliament. The president will submit his nomination to the parliament for a “fit and proper test” before the parliament gives its approval.
“The president has not yet proposed the nomination,” Hadi said.
The government urged market participants to remain calm during the transition period. The appointment process would be carried out transparently and accountably and would not disrupt monetary policy or economic stability, it said in a statement.
Damayanti, who was a commissioner at the Indonesia Deposit Insurance Corp. and previously the chief economist at Bank Mandiri before joining BI’s board, said the central bank “will always ensure the continuity of its duties and authorities” to maintain the stability of the rupiah and financial system to achieve an economic environment that is conducive for growth.
Rating agencies Moody’s and Fitch cited concerns regarding changes in Bank Indonesia’s mandate as among key drivers of their credit rating outlook cut to “negative” earlier this year.
However, rival rating agency S&P this month kept its Indonesia rating outlook “stable” and said BI has had a level of operational independence since July 2005 that was roughly in line with regional peers, and it did not expect BI’s changing mandate to drastically affect such independence. All three rated Indonesia’s debt at the second-to-lowest investment grade.
Southeast Asia’s biggest economy is a net oil importer, but the government has insisted on leaving the price of heavily subsidized fuel unchanged despite mounting pressure on the public purse.
Consumer prices rose 3.34% in June, and growing economic strain triggered student protests demanding the government stop excessive spending, including on its billion-dollar free-meals scheme, which has since been cut back.
Critics also hit out at a government decision to raise the non-subsidized fuel price by a third.
Indonesia’s stock market has lost about a third of its value in 2026, and its stock exchange has been rattled by the threat of a downgrade by stock market compiler MSCI.
Global shares were mostly higher Monday and oil prices slipped nearly 7% as the U.S. and Iran paused strikes over the weekend following two weeks of attacks while discussing a possible return to negotiations on an interim cease-fire deal.
The Pentagon did not respond to questions about the pause in attacks on Iranian coastal areas and infrastructure after nearly two weeks of escalating fighting sparked by Iran’s firing at ships trying to transit the Strait of Hormuz.
But markets reacted with relief. U.S. futures surged early Monday and the price of a barrel of Brent crude, the international standard, dropped 6.8% to $85.49.
U.S. benchmark crude dropped 7% to $83.06 per barrel.
“Oil’s sharp retreat at the Monday open did more than knock a few dollars off the barrel. It loosened the geopolitical knot that had been tightening around equities, currencies, bonds and central banks for most of July,” Stephen Innes of SPI Asset Management said in a commentary.
Brent had reached $100 per barrel as the conflict, which reduced oil shipments via the Strait of Hormuz, spilled over to the Red Sea, hindering exports from the world’s top exporter, Saudi Arabia, via the Bab el-Mandeb Strait to Asia.
Fewer than 10 commodity vessels passed through the Strait of Hormuz daily during the weekend, shipping data from Kpler showed.
“Any rebound in flows through the Strait of Hormuz is likely to prove slow and partial, as many shippers remain wary and will want greater confidence in their safety before they bring more empty ships into the Strait,” MST Marquee analyst Saul Kavonic said.
In addition, ship traffic through the Bab el-Mandeb Strait fell on Sunday after Yemeni Houthis attacked Saudi oil installations along the Red Sea coast, although a third Chinese supertanker exited via the Bab el-Mandeb Strait. Societe Generale analysts estimate that each month without a resolution in the Red Sea would add at least $10 a barrel to the oil price.
Some analysts expect markets will remain supported if crude supplies continue to be disrupted by ongoing shipping risks in the Middle East and Russia’s war on Ukraine.
“As the Middle East conflict widened to the Red Sea and Ukrainian drones struck Russian ships and refineries… sustained (supply) disruption would likely keep oil prices elevated and continue to pose upside risks to global inflation,” UOB analysts said in a note.
Ukraine said it hit several Russian oil sites over the weekend.
Chinese chipmaker CXMT soars
Meanwhile, shares in Chinese memory chipmaker CXMT soared 466% on Monday as they began trading on Shanghai’s technology board. The company jumped to become China’s most valuable listed company with an estimated market capitalization of 3.3 trillion yuan (nearly $490 billion).
In early European trading, Germany’s DAX gained 1.6% to 25,497,42 and the CAC 40 in Paris was up 0.8% at 8,436.94. Britain’s FTSE 100 rose 0.5% to 10,784.00.
The futures for the S&P 500 and Dow Jones Industrial Average were up 1%.
In Asian trading, Japan’s benchmark Nikkei 225 rose 0.5% to 64,931.19, while the Kospi in South Korea advanced 1% to 6,755.75.
Hong Kong’s Hang Seng climbed 1% to 25,207.18, while the Shanghai Composite index gained 1.2% to 3,858.25.
In Australia, the S&P/ASX 200 surged 1.4% to 8,894.00.
Taiwan’s Taiex slipped 0.1% and the Sensex in India added 1.1%.
On Friday, the S&P 500 barely budged, picking up less than 0.1% and notching its second straight losing week for the first time since March.
The Dow industrials rose 0.5%. The Nasdaq composite index slipped 0.6%, weighed down by sharp losses for heavyweights like Micron Technology, which fell 7%, and Broadcom, which lost 2.7%.
Recent surges in energy prices and fresh tariffs announced last week by the administration of U.S. President Donald Trump could result in hotter inflation, which has been squeezing consumers and looming over the Federal Reserve’s (Fed) interest rate policy.
The Fed meets this week, though rising inflation has dashed hopes for an interest rate cut anytime soon. Wall Street has been leaning toward a potential rate hike to tamp down higher prices.
Higher energy costs are taking up a bigger share of household budgets, which have shifted toward more basic needs, like gasoline.
In the U.S., a gallon of gasoline costs $4.11, according to AAA. That is still lower than this spring as the conflict in Iran expanded, but almost a dollar higher than last year at this time.
“Oil is the fastest-moving tax in the global economy,” Innes said.
When crude rises sharply, consumers feel it at the fuel pump, airlines and transport companies feel it in their operating costs, manufacturers feel it in their logistics, and central banks begin worrying that the initial supply shock will spill over into broader inflation expectations,” he noted.
Meanwhile, corporate earnings reports are focusing attention on the sustainability of broader profits from a boom in spending on artificial intelligence.
Tech giants like Alphabet and Nvidia have been spending heavily to expand AI capacity and investors increasingly are questioning whether they will generate profits to justify the massive stock values that have pushed markets higher throughout the year.
In other dealings early Monday, the U.S. dollar slipped to 163.56 Japanese yen from 163.64 yen. The euro rose to $1.1399 from $1.1398.
U.N. chief Antonio Guterres called on Sunday for an immediate removal of all sanctions imposed on Syria during the era of former ruler Bashar Assad, as he concluded a two-day visit to the country.
“I welcome steps that have eased sanctions and the opening of new possibilities for economic recovery, but all these sanctions must be removed immediately,” Guterres told a news conference in Damascus.
Syria’s new authorities, who took power in December 2024, are trying to turn the page after more than 13 years of war, and to reboot the economy and rebuild infrastructure and institutions.
Western countries, including the U.S., have begun lifting economic sanctions on Syria. But investors have remained cautious, as the World Bank has estimated the country’s post-war reconstruction could cost $216 billion.
“The United Nations stands with the people of Syria at this pivotal moment. And I came carrying the strongest possible appeal to the international community, an appeal to spare no effort to support the Syrian people and to support the Syrian government,” Guterres said.
“Syria today is at a crossroads,” he added.
Guterres is the first U.N. chief to visit Syria since his predecessor Ban Ki-moon in 2009, two years before the start of Syria’s war, which killed half a million people.
“Syria needs investment in its people, its economy and its institutions. Syria needs support to restore essential services, rebuild infrastructure, revive livelihoods,” he said.
It also needs help “for the safe, voluntary and dignified return of refugees and internally displaced people,” he added.
The potential breakup of the major German battery manufacturer Varta is seen as a problem for the entire industry in the country, according to the battery expert Dirk Uwe Sauer.
A creditor group led by Deutsche Bank and the financial investors RBC BlueBay, Blantyre and Whitebox announced earlier this week that it intends to spin off the well-known household battery business from the Varta Group, blaming the company’s strained financial situation.
On Friday, Varta confirmed it had filed for preliminary insolvency under self-administration, in a bid to secure its economic future.
“There are only a few companies like Varta in Germany,” said Sauer, a professor at RWTH Aachen University.
“If the company’s profit center is carved out, the question is how future innovation will be financed,” he said.
Varta said the insolvency filing was intended to enable the sustainable continuation of its business operations.
“Technologically speaking, what Varta does is very good,” said Sauer. Ultimately, however, it all comes down to price.
That, he argued, reflects a broader challenge facing Germany’s battery industry.
“We don’t have large-scale manufacturing,” Sauer said. By contrast, China has built up massive production capacity, triggering intense price competition.
“We’ve known for a long time that we’re heading into this dilemma of dependence on China,” he said.
Sauer nevertheless sees promise in Varta’s work on sodium-ion batteries, an emerging technology that could help Europe diversify its battery supply chain.
“Sodium-ion batteries represent a real opportunity for Europe to reduce its dependence on China, because the raw materials required for them are more readily available on the global market,” said Sauer.
The U.S. Federal Reserve (Fed) is set to convene its second policy meeting under Chair Kevin Warsh starting Tuesday, with markets expecting interest rates to remain unchanged as officials weigh persistent inflation risks, including potential pressures from President Donald Trump’s renewed conflict with Iran.
Warsh was chosen to lead the U.S. central bank by Trump, who has made his demand for lower interest rates clear as he has exerted unprecedented pressure on the independent monetary policymaking body.
After two days of closed-door sessions, the Fed’s open market committee (FOMC) will announce its decision on Wednesday at 2 p.m. (6 p.m. GMT), followed by a news conference by Warsh.
Most investors expect the Fed to hold rates steady at 3.50%-3.75% range for the fifth straight meeting, according to CME’s FedWatch monitoring tool.
U.S. consumer inflation eased to 3.5% on an annual basis last month, but remains far higher than the Fed’s long-term 2% target, which it has not achieved for more than five years.
Since last week, a ramping up of hostilities has seen intense U.S. strikes and Tehran’s retaliatory action targeting Washington’s allies across the region, while Yemen’s Houthis have also threatened to blockade the Red Sea oil trading route.
The fighting has sent energy prices soaring once more, with the benchmark oil futures contract breaching $100 per barrel for the first time since late May, when energy prices were on the downward path.
At the Fed, policymakers have been losing patience with persistent inflation, indicating that a rate hike may be near.
The Fed “has to be ready to tighten monetary policy to prevent a repeat of the 2021-to-2022 inflation episode,” Fed Governor Chris Waller said last week.
“Sternly staring at inflation until it melts before our withering gaze is not an option.”
‘Hawkish core’
Since taking office, Warsh has vowed to reduce or eliminate the amount of forward guidance the Fed provides on its decision-making process, a move that has received mixed reactions.
The new chair has said that providing forward guidance locks policymakers into positions that they may need to change. Some analysts, however, argue that opacity in decision-making creates more uncertainty for markets.
In public statements since taking control of the Fed, Warsh has said he has a “resolute commitment” to delivering price stability, but has not offered details on how and when he thinks it would be appropriate to act.
The Fed has a dual mandate to keep inflation to its long-term target while also delivering maximum employment.
Its main tool to achieve this is the economy’s key interest rate – raising rates tends to curtail economic activity and high prices, while lowering them encourages hiring and investment but can also stoke inflation.
The U.S. labor market has largely stabilized, with steady unemployment despite zigzagging job growth, leaving policymakers mostly focused on inflation.
“‘Resolute commitment’ is, in my opinion, insufficient to tighten monetary policy and curb any inflationary pressures,” said Gregory Daco, chief economist at EY-Parthenon.
With Warsh largely remaining silent, several other policymakers have been vocal about their concern over high prices and the potential need for action in the near term.
“When you create a vacuum, it’s oftentimes the case that the vacuum gets filled,” said Daco.
With headline inflation dipping in June, ahead of further rises expected ahead, analysts say they do not expect a rate hike at this meeting, but that the decision will likely see some dissenting voices.
“We may have a new chairman, but the old guard is now worried about where the economy has moved since the beginning of the year,” Diane Swonk, chief economist at KPMG, told Agence France-Presse (AFP).
Inflation has been under pressure not just from rising fuel prices due to the war, but also due to heightened demand from the AI boom and the continued effect of Trump’s tariffs rippling through the economy.
“The hawkish core of the Fed has not only hardened, but it’s broadened,” said Swonk, who expects two rate hikes later this year.
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