Global Outlook
*We have never experienced such an
economic instability since 2008 global economic crisis. There are different views
about global economy ranged in a very scattered. Some is so optimistic.
Residual ones are so pessimistic. Neither country regulatory bodies nor private
companies are able to feel confidence about future. 
All economies
around the world staring to FED for the imminent increase at Federal funds
rate. Recent Federal Open Market Committee met in October 26, stress the points
that economic activity has been expanding at moderate pace, residential and
commercial real estate market are strengthening, household spending advances
and unemployment rate remains steady. However, inflation rate is still under
the Federal Reserve objective (2%) with the temporary effect of low commodity
and energy prices. The committee also noticed that interest rate increase can be
possible in December only if positive macroeconomic view continue to
expand and supported by financial data (1). On the other hand some negative
views are declared that U.S.A. economy is producing same value in output with
higher number of employee hours spending with additional employment. So, this will
decrease utilization in medium-long term and will harms U.S.A. in global
market.
* Playing a
dynamo role in global economy for years, China shows indications about slowing
and cause to raise negativity day by day at globally. These anxious are
supported by data like PMI. October PMI in China was 49,8 same with previous
months and shrunk third consecutive months (5). (PMI: Purchasing manager index,; Questionnaire result
analysis of manufacturing company’ s purchasing managers fill, about current
economic environment with the context of new orders, inventory levels,
production, supplier deliveries, employment environment. The results; above
50,0 indicates expansion in economic activity, equal 50 no change, below 50
represents contraction compared with previous month). However, China’s currency
yuan is on the way of joining International Monetary Fund currency (SDR)
basket. These can be an important milestone for China to overtake USD dollar
and become reserve currency in global economy (6). Another Asian country, Japan
economy is stuck in recession problem with the 1,6 % of shrunk at the 3rd
quarter of 2015(8). Although Central Bank of Japan continue to easing
operations with supplying money in the market, additional sales tax enacted in
April 2015 seems to biggest reason for this constriction. (7) It leads that
private market cuts investments, laid off employees and makes diminutive salary
increases broke customer confıdence about future.
* Europe is still dealing with low
inflation problem that limit growth. Although quantitative easing operations
has been already taken in the progress onset of 2015 by European Central Bank,
it seems that policy did not help for further growth. Increasing uncertainties
regarding development in emerging markets especially in China oppress the
Europe export trade because of holding status quo as the biggest market of
European Union. Greece, Portugal, Spain
budget deficits and government debts remains as hunch on the back of Union. On
the other hand, Russia-Turkey tension outbroke with plane crash upon air
missile by Turkey with the cause of air space violation. Russian President Putin’s
commentaries upon this accident increase anxiety around world with the
possibility a new war. Although interdependent economic relationship between
these two countries, progress of tension is issue of concern.
Local Outlook
* The biggest outstanding problem in
Turkey economy, trade deficit in exports and imports, seems to be recovering a
bit with the effect of low price level in oil and derivatives. But, economic
structure still needs to be changed from consumer to producer, importer to
exporter society. The radical economic reforms and subsidies for promising
export based markets need to be enacted by new economy body of government. The recent meeting held at 24 November 2015,
Central Bank of Turkey keeps political interest rates same level, 7,5 %,
stressing FED December meeting into new information flow from global financial
market may lead to change its policy (9).
* The former minister of finance, now
Economy minister Mehmet Şimşek declared that there will be no additional tax
will be implemented in 2016. Existing fixed price taxes, duties and charges
will be increased by 5,58 % (10).
* Tension between Russia and Turkey upon plane
crash has been getting higher level day by day. Economic sanctions of Russia
through Turkey have been already approved and entering in force within 01
January 2016. Although this sanction has wide spectrum from food, tourism to
transportation industry (11), it can be small effect on Turkey economy. In
2014, Turkey exported only 2,8 billion to Russia while importing 15,8 billion.
Losing all export trades effect of Gross Domestic Product will be only 0,33
%(13). On the other hand, a possible gas interdiction can risk to industry and
daily living. Approximately 27,5 % of
total electricity consumption of Turkey is derived from gas imported from
Russia (14).
Automotive Market Outlook
VW Emission scandal has been
transforming automotive industry and gives a new form from market through
technology in use. VW has been made a
touch back of TOYOTA with 10,13 million sales in 2014 only 0,1 million less than it and expected to
overtake it in 2015(12). But emission scandal brings new cuts from investments,
marketing budgets and several operations of VW and leads to change production
plan fully revised. So, market shares and sales number is waited with anxiety
at the end of 2015. A scandal of 2nd car manufacturer of the world
potentiated new Green energy usage in near future.
In 2014 was record year for
automotive suppliers with 7,5 % average EBIT margin accompanied high level of
capacity utilization around world. Although automotive industry suppliers
generally outperform OEM producers in terms of profitability, small sales
turnover levels make important limitation through investments and operations.
In 2015, OEM producers are facing increasing margin pressure and reflected it
to suppliers with demanding discounts (15). The
factors given below are constantly affecting global automotive supplier
industry
- Customer demand rise in Asia
- Relocation of R&D Centers and
manufacturing facilities to China and BRIC countries
- Downstream expansion of raw
material providers to enhance profitability
Personal Income
|
23%
|
Government Taxes on Automotive Vehicles
|
22%
|
Customer Credit Cost
|
20%
|
Global Economic Developments
|
24%
|
Others
|
11%
|
While
1,3 million vehicle has been produced in Turkey in 2014, nearly 29% of it sold
in local market. Hyundai Assan has been implemented a new investment to increase
production capacity in 2015, As Jaguar announced to make a plant investment in
Turkey. According to KPMG reports, local automotive industry growth is affected
in last five years by factors placed to left side (17). At this point, Interest
rate policy of Central Bank has important weight in customer preference to buy
in automotive industry.
It can be helpful to indicate that
automotive market sales is 727K at first
10 months of 2015 and expected a new record 900-950K at the end of year(18).
Commodity Prices
Oil: After United
States has been ranked as number one oil reserved country with rendering
possible use of passive oil reserves under deep rocks with developing technology,
oil prices are constantly depreciated. Brent crude hovers around 40-60 USD
dollar in 2015 and lately 45 USD (3). Supply
excess is still threatening oil-export economies thoroughly lower prices and
deeper budget deficits. Some of OPEC countries are worried about to experience 20
USD Dollar level for brent crude. (2).
The OPEC Meeting will be held at 4 of December will bear so importance for both
oil export-driven economies and importer ones to take precautionary movement (4).
(Bloomberg,
30.11 2015)
Copper: Economists
use copper as one of the main economic indicator for several years. Relatively
inexpensive and abundant nature with resistant to corrosion and effective
conductor specifications makes it most prevalent raw material used is
especially in emerging market economies relied on manufacturing industry
(19). The decline trend in price of
copper indicates a slowing in emerging market economies. The one year price
level graph below show us a constant decline in price level from 280 USD/Ibs to
200 USD/Ibs(4). This price level is the lowest point in five year although
there is no change in supply side. So we can say that danger bell is ringing
for emerging markets.
(Bloomberg,30.11.2015)
Steel: Similir to
copper, Steel is also one of the main raw materials of construction and durable
goods. But, overcapacity of steel industry and high transportation cost make
steel prices locally differs although contract of this commodity are sold in
London Metal Exchange on the basis of cash settlement. There are too many kind
of steel from HRC to rebar. Because of this reason we will not put a graph in
there. But, Steel prices is also declining all around the world because of
slowing down consumer goods and construction industry (20)
References
16. Z:\E_Proje\06_Controlling
17.http://www.osd.org.tr/yeni/wp-content/uploads/2014/03/KPMG-T%C3%BCrkiye-2014-Otomotiv-Y%C3%B6neticileri-Ara%C5%9Ft%C4%B1rmas%C4%B1_FINAL.pdf
