Economy
Türkiye to remain major global sukuk, emerging market debt issuer: Fitch
Türkiye’s debt capital market is expected to keep expanding, and the country is likely to remain a major global issuer of sukuk and emerging market debt this year, Fitch Ratings said Tuesday.
This will be driven by high external financing requirements, upcoming maturities, wider fiscal deficits and funding diversification goals, the credit ratings agency said in its debt capital market monitor report covering the first half of 2026.
Fitch said Türkiye’s debt capital market remained largely driven by government securities and grew 9% year-over-year to more than $516 billion at the end of the first half of the year despite volatility related to the Middle East conflict.
The ratings agency said Türkiye became the world’s fifth-largest sukuk market in the first six months and remains one of only three G-20 countries with an active sukuk market.
Outstanding sukuk assets increased 25.8% from a year earlier to more than $41 billion, significantly outpacing the 8% growth recorded in the conventional bond market, Fitch said. Sukuk were about 14% of debt capital market issuance in the first six months, compared to 8% a year ago.
According to the report, Turkish lira-denominated securities accounted for 64% of the country’s debt capital market, while U.S. dollar-denominated instruments represented 33%.
Excluding China, Türkiye ranked as the sixth-largest issuer of U.S. dollar-denominated debt among emerging markets during the first half of the year, with a 7.4% market share.
Fitch forecasts Türkiye’s debt capital market will expand to around $550 billion by the end of 2026.
The agency said banks and corporates are also expected to continue tapping debt markets as financing opportunities arise, although investor sentiment and volatility stemming from regional conflict could weigh on issuance activity.
“Türkiye has low government debt, and sustained access to external financing through periods of stress. However, further regional escalation could weigh on investor sentiment, yields, and liquidity,” said Bashar Al Natoor, global head of Islamic finance at Fitch.
“Foreign investor demand for recent Turkish sovereign U.S. dollar sukuk and bonds remained intact, but foreign participation in the local-currency market is falling.”
Türkiye has joined a small group of countries capable of producing advanced infrared detectors after its top defense contractor developed a new generation of electro-optical sensors for use across a wide range of military platforms.
In a post on X on Tuesday, Aselsan introduced its domestically developed infrared detector family, designed for applications ranging from unmanned aerial vehicles (UAVs) and air defense missiles to next-generation combat aircraft and armored vehicles.
The defense electronics maker said it had developed the most critical electro-optical components for strategic systems using national capabilities.
“Leveraging our expertise in microelectronics, we have positioned Türkiye among the select countries capable of developing and manufacturing infrared detectors,” Aselsan said.
According to the company, the new detector family has been developed in both cooled and uncooled configurations to meet different operational requirements.
Aselsan produces radar equipment, drone components and air-defense systems and is Türkiye’s most valuable publicly traded company in market capitalization terms.
Supporting key defense platforms
The domestically developed detectors are already being integrated into several major Turkish defense programs, the company said.
It cited their use in the Yamgöz 200 surveillance system fitted to the Altay main battle tank, the Toygun electro-optical system aboard the Bayraktar Kızılelma unmanned combat aircraft, and sensors used in the Hisar air defense missile system, part of Türkiye’s multilayered Steel Dome air defense architecture.
The infrared detectors are intended to enhance the ability of these platforms to detect, identify and track targets at night and in adverse weather conditions.
Strategic technology
Infrared detectors are among the most critical components in modern electro-optical systems, enabling thermal imaging, target acquisition, missile seekers, reconnaissance payloads and precision targeting systems.
Aselsan said the technology is also used in unmanned aerial systems, missile seeker heads, targeting systems and the electro-optical suite of Türkiye’s indigenous fifth-generation fighter jet Kaan.
Only a limited number of technologically advanced countries currently manufacture high-performance military-grade infrared detectors, making the capability an important benchmark of technological sophistication.
Infrared detectors are also used in a range of civilian sectors, including industrial inspection, security, environmental monitoring and scientific imaging.
The ability to produce such sensors domestically provides strategic advantages by improving surveillance and target detection capabilities in low-visibility environments, including darkness, dust, smoke and fog, while reducing dependence on foreign suppliers for critical defense technologies.
The Turkish capital, Ankara, has witnessed a remarkable performance in exports in the first seven months of 2026 as they surged by nearly a quarter compared to the same period a year earlier to a new record, according to a report on Tuesday.
Ankara’s exports surged 23.4% year-over-year to a record high of $10.81 billion (TL 514.07 billion), marking the capital’s strongest January-July export performance on record.
According to an Anadolu Agency (AA) compilation of Trade Ministry data, Türkiye’s total exports rose 3.4% on a yearly basis to $161.6 billion in the same period.
When looking at the exports from the capital, a notable increase is observed from 2023 to the present.
The overseas shipments, which stood at $6.88 billion in January through July 2023, climbed to $7.59 billion in the same period of 2024 and $8.77 billion in January through July 2025, trade data shows.
U.S. top export destination in 2026
Moreover, a breakdown of Ankara’s exports by destination showed that the U.S. was the top export market in the January-July period, with shipments totaling $865.7 million.
It was followed by Slovakia with $786.7 million, Ukraine with $736.8 million, the U.K. with $725.3 million, and China with $704.9 million, respectively.
Among Ankara’s exports in the first seven months of the year, the electrical and electronics sector ranked first with $1.25 billion.
It was followed by the automotive industry, which shipped goods worth $1.17 billion, chemicals and chemical products with $1.06 billion, and machinery and components with $1.04 billion.
The sector posting the strongest percentage growth in exports during the January-July period was ornamental plants and related products, soaring 487.2% year-over-year.
It was followed by hazelnuts and hazelnut products with 92.4% growth, electrical and electronics with 73.8%, and cement, glass, ceramics and soil products with 35.3%.
British banking giant HSBC maintains its positive view on Turkish equities, saying Tuesday that tensions in the Middle East have delayed, but not derailed, the country’s monetary policy normalization.
In a strategy report, HSBC Global Investment Research said Turkish assets remain attractively valued despite recent market volatility and that they have outperformed the FTSE Emerging Markets Index by around 5% since the start of the year.
The bank noted, however, that most of those gains were recorded in January and February, with the market trading in a relatively narrow range after the outbreak of war following joint U.S.-Israeli attacks on Iran in late February.
Higher oil prices have weighed on inflation expectations and prompted the Central Bank of the Republic of Türkiye (CBRT) to keep its one-week repo rate unchanged at 37% for four straight months, postponing the start of its monetary easing cycle.
Türkiye’s annual inflation eased for a second consecutive month to 31.75% in July, official data showed Monday.
Policymakers are watching inflation data and geopolitical developments before shifting the rates path.
Despite the delay, HSBC’s economists said interest rate cuts could resume as early as September if domestic economic conditions continue to improve.
HSBC expects Turkish equities to remain range-bound for the next few months before entering a more sustained rally beginning in the fourth quarter of 2026 and continuing through 2027.
4 structural growth themes
The report argues that Türkiye offers several long-term structural investment opportunities that are not solely dependent on macroeconomic conditions or renewed foreign capital inflows.
HSBC identified four sectors with the strongest long-term investment potential:
Defense, supported by rising global military spending and Türkiye’s growing defense exports. Infrastructure and reconstruction, driven by rebuilding efforts in the Eastern Mediterranean, large-scale Gulf infrastructure projects and potential opportunities in Ukraine. AI infrastructure, where Turkish transformer and electrical equipment manufacturers are benefiting from supply bottlenecks and long delivery times in the United States. Aviation, with Istanbul expected to gain market share as airlines increasingly reroute traffic through Gulf aviation hubs.
Valuations remain attractive
HSBC said Turkish equities continue to trade at attractive valuations despite a sharp decline in foreign investor participation.
According to the report, foreign ownership on Borsa Istanbul has fallen from around 65% a decade ago to 33%, while overseas investors withdrew roughly $2 billion from Turkish equities between March and June.
The bank argued that low foreign positioning and inexpensive valuations continue to support its constructive long-term outlook.
HSBC noted that Borsa Istanbul is trading at a 12-month forward price-to-earnings ratio of 7.5, while the market’s implied 25% cost of equity appears overly conservative relative to long-term inflation expectations.
The bank reiterated its “overweight” recommendation on Turkish equities.
HSBC also flagged several risks to its outlook, including the potential for domestic political uncertainty if early election discussions emerge.
The report added that investors are monitoring whether Türkiye meets MSCI’s requirement to improve free-float transparency by November, although HSBC said it expects recent regulatory steps to prevent any potential restrictions related to the country’s market classification.
Artificial intelligence could allow developing countries to achieve a century’s worth of development in only a decade if they act quickly on power, connectivity and skills gaps, the World Bank said in a report on Tuesday.
The lender called on developing countries to embrace the AI tools to deliver better governance outcomes, warning that they risked being left behind if they failed to do so.
“AI has thrown developing economies a lifeline, and they should seize it,” Indermit Gill, chief economist of the World Bank Group, said as the organization launched its annual World Development Report (WDR).
“They do not need large models or big data centers to reap its benefits,” he added, advocating for the adaptation of lower-cost AI tools to local conditions to deliver results in the health, education, justice and agricultural sectors.
Widespread job losses due to AI are also less of a threat to emerging economies, the report found, adding that developing economies have more to gain and less to fear than richer nations.
Companies worldwide are spending billions to harness an anticipated AI revolution, while governments are scrambling to ensure their nations reap the benefits.
The International Monetary Fund (IMF) has earlier said that AI could boost sub-Saharan Africa’s economy by about 4% over the next decade under the right circumstances.
Weak growth, repeating shocks
“Developing economies today are in the midst of their weakest average growth performance in three decades,” said a World Bank statement accompanying the report.
“AI could significantly boost that performance before the end of the 2020s while delivering tangible benefits to people,” it noted.
Lower-income countries have struggled through the 2020s, hit by a series of successive shocks that saw the World Bank earlier this year dubbing it a “lost decade” for their economic growth.
The bank has lowered its 2026 global growth forecast to its lowest level since the COVID-19 pandemic, with the economic fallout of the Iran war battering countries around the world.
The shock has hit low-income and developing countries hardest, with Asia the worst-affected region.
The bank’s new report advocates for developing countries to start working with localized AI tools and solutions now, and to invest in electricity generation and distribution; expand access to computing power; and improve the availability of local data.
“The window to get this right is narrow,” said Gaurav Nayyar, director of the report.
“AI presents a once-in-a-lifetime opportunity to solve problems that have resisted solutions for generations,” he added.
For the 6.8 billion people, or about 83% of humanity, who live in low-income and developing countries, AI tools will need to be adapted to meet their needs.
The report shares examples of AI applications in governance, such as boosting diabetes screening volumes in Bangladesh or reducing costs for Indian farmers through advanced weather forecasts.
The solutions, the report stresses, will need to meet people where they are.
“For example, AI solutions will need to be delivered through voice calls on basic mobile phones for those who cannot read or afford smartphones,” it says.
“Simply importing an AI model does not mean it will work well locally.”
‘AI could widen gaps’
The report also calls for policymakers to build public trust as they expand AI use.
“Improved public services and better learning outcomes in schools will reinforce trust, but if AI embeds bias in government decisions or erodes data privacy, that trust will be difficult to recover,” said the statement.
The report delivers a stark warning, too.
“AI could widen gaps between countries, increase inequality within them, concentrate market power, weaken trust in public institutions, and create new risks for safety, rights, and social cohesion.”
And while risks to employment in developing countries are low at the moment, it warns that in the long-run AI tools could cut off economic mobility by eliminating many of the middle-class jobs that enable it.
The report was written with the aid of several of the world’s most advanced AI tools, including offerings from OpenAI, DeepSeek, Google and Anthropic, according to a disclosure.
Americans see Democrats as better on the economy than Republicans for the first time in nearly a decade, according to a poll, as U.S. President Donald Trump’s approval rating slides.
The finding, in a Reuters/Ipsos poll conducted Wednesday through Monday, showed how Trump’s handling of the economy, including rising energy prices resulting from the Iran war, could weigh on his party’s chances in the November midterm elections that will determine control of Congress for the next two years.
Trump’s presidential approval rating fell to 35% from 37% in a prior poll conducted last month, with the share of Americans who give his presidency a thumbs up within just one percentage point of the lowest level of his term.
Some 37% of registered voters responding to the poll said the Democratic Party has a better approach to the U.S. economy, compared with 36% who picked the Republican Party. Another 27% said they were not sure or that a different party would do a better job.
Republicans had held the advantage on the economy through most of Trump’s first term in office in 2017-2021, through all of Democratic President Joe Biden’s four years in power and into Trump’s second term.
A Reuters/Ipsos poll that concluded in May 2017 gave Democrats an edge, though the question was asked differently, with no option for respondents to say they were not sure or that a different party would do better.
Deteriorating Republican edge
The Republican edge on the economy has steadily deteriorated during Trump’s current term, narrowing to zero in recent months as U.S. household finances suffered from soaring gasoline prices following the U.S.-Israeli attacks on Iran in February and the war that has been simmering ever since.
Trump has said he ordered the strikes and ensuing conflict to dismantle Iran’s nuclear program, curb its ability to attack regional rivals and create conditions for Iranians to overthrow their clerical rulers. But gasoline prices have surged by more than 25% since the war started, with Americans on average paying more than a dollar extra per gallon at the pump.
The poll, which was conducted online and nationwide, found 42% of registered voters would vote for a Democrat in congressional elections and 37% would vote Republican if the contest were held now.
Independents in the poll picked Democrats over Republicans by 12 percentage points. Republicans will be defending narrow congressional majorities in the November 3 elections.
While the poll presents a picture of the national political mood, the actual elections for the U.S. Congress are more complex. Of the 435 House of Representatives seats, only about three dozen are expected to be competitive, while about eight Senate seats are expected to be competitive.
Trump has repeatedly dismissed widespread polling showing Americans unhappy with his leadership. On Monday morning, ahead of the release of the latest poll, he posted to his Truth Social account: “My REAL Polling Numbers, not those made up by the Fake News Media, are the best they have ever been.”
The Reuters/Ipsos poll gathered responses from 4,505 U.S. adults and had a margin of error of 2 percentage points.
Twenty-five U.S. states, almost all led by Democrats, sued the Trump administration on Monday over its latest wide-ranging tariffs imposed on dozens of countries, including key trading partners, arguing that the president had exceeded his authority.
The states filed suit at the U.S. Court of International Trade in New York, asking that judges halt the implementation of the tariffs, declare them unlawful and order the government to issue refunds.
“There is no rational fit between the purported problem of forced labor in international supply chains and the blanket global tariffs the USTR imposed,” the coalition of states argued in a court filing, referring to the U.S. Trade Representative’s office.
The challenge is related to Trump’s latest salvo of tariffs in a range between 10% and 12.5% imposed against 60 trading partners last month.
The tariffs were imposed after probes by the USTR’s office over allegations of “forced labor,” conducted under Section 301 of the Trade Act of 1974.
Since taking office for his second term, Trump has upended global trade by imposing wide-ranging tariffs, at times reaching eye-watering levels on Washington’s friends and foes alike.
Trump has argued that U.S. trading partners have been taking advantage of the world’s largest economy, and has sought to use tariffs as leverage to strike new trade deals.
On Monday, the White House hit back at the latest challenge to Trump’s tariffs, arguing that the government’s move was legal.
“The United States is using its lawful authority to obtain the elimination of unreasonable acts, policies, and practices that burden US commerce,” said Kush Desai, a White House spokesperson, in a statement.
“Section 301 tariffs have proven to be a legally durable tool since the President’s first term, and they remain so now.”
Earlier challenges
Trump’s first round of tariffs, imposed under the International Emergency Economic Powers Act (IEEPA), was struck down by the US Supreme Court in February.
He replaced those with a 10% global levy, which expired in July.
The new Section 301 tariffs replaced that levy, taking effect as the 10% tariff expired on July 24.
Of the 25 states in the suit, 23 have Democratic governors while two, Nevada and Vermont, are led by Republicans.
In their court filing, the states argued that the Section 301 probes were “a pretextual and unlawful effort to exert unfettered tariff power.”
The document lays out a timeline of Trump administration officials’ statements, arguing that the investigations were rushed and prejudged when they were initiated.
“The Tariff Action is arbitrary, capricious, and contrary to law,” the complaint says.
“The Plaintiff States oppose forced labor in all its forms and support protections for workers around the globe. But the Administration cannot use forced labor as a pretext to continue its illegal tariff scheme.”
Trump’s separate sector-specific tariffs, imposed under different legal authorities on steel, automobiles and other goods, have been unaffected by recent legal challenges.
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