Global Outlook
*Vice Chairman of F.E.D. Stanley Fischer joined the 35 th
annual IHS CERA Week with the theme of “Energy Transitions: Strategies for a
New World” at 23 February. Stanley Fischer made stress to uncertainty global
economy and said “The world is uncertain place-sometimes more uncertain than
any other times-” It is the reason that why committee has indicated that its
policy decisions will be data dependent. Labor market and aimed inflation rate
of U.S.A. sounds good in recent times.
Unemployment rate in January was 4,9 % and inflation rate in mid-term
will be hover around 2 % although the commodity and oil prices are still in low
price levels. But interest rate hike in next meeting can be a premature
decision compared dangers in global economy. It can be an important issue to
reduce Balance Sheet size of F.E.D. in
near future although Mr. Fisher
indicated that they have flexibility to adjust size of it. Federal
Reserve’ balance sheet grew from less than 1 trillion to 4,5 trillion in 6 year
(1).
*China will have a harsh year for 2016. China’s situation in
stuck can be sum up with a motto “Rich Country Poor Budget Problems”, the
population of China is getting older. Retired population claims better life
conditions while young generation demands increased access to education (2).
The government made a regulation start from January 2016 that permit second
child to increase working population rate in society. The solution of second
problem will probably come with budget deficits. It is the open point how will
government meet these deficit?
*European side, it is a word that has become used to describe
that UK leaving the EU – consist of first letters of two words Britain and exit to get Brexit. After
Grexit debates, it is getting higher possibility to see an exit from European
Union in near future. It formed after World War II to prevent wars between
European countries by creating a single market enabling free move for goods and
people. Although considerable time period has been passed over the first years
of union. There is still no unity on EURO currency (3).
Table 1: Economist, February 2016
There will be held an referendum in UK within 23 June
Thursday and officially declared that the question about UK exit from European
union will be asked to citizens as: "Should the United Kingdom remain a
member of the European Union or leave the European Union?". UK citizens
are totally split up around that question. At one side, Independence party,
which was the leading party with 13%, is supporting to leave from EU while
David Cameron and conservative party defend to stay at EU. On the other hand
Illegal immigrants from Syria are still a headache for EU.
*Russian economy is going quagmire rapidly while we are
headed the first quarter of 2016. Oil prices seems to hover around 30 – 40 USD
Dolar/brent along 2016. It is the wonder point that How Russian citizens meet
catastrophic reduction on budget. Putin rejecting sales of state assets to
prevent economic meltdown. Possible panic can lead to change of government and
grow the protest (5).
Local Outlook
*Turkey has made a great economic breakthrough in last 15
years. It became important player in high quality consumer goods, eighth –
biggest food producer, and sixth most popular tourism destination in the world.
While nominal household income level has been tripled in last decades, saving
rates erode to lowest level among all emerging market economies with 12,6 % of
GDP. Turkey is one of the best examples of “middle-income trap”, achieved
poverty recently and doing best to join club of rich countries. Turkey learned
how to assemble cars, consumer products, how to boost farming productivity. Now
it face to achieve harder stage: creating global brands with investing design,
value added R&D (6). One other danger signal for Turkey economy is
increasing foreign debt level. It reached $400 billion in 2016 (50 % of GDP),
mostly short term and private based.
Automotive Market Outlook
*According to recent surveys, changing consumer preferences,
tightening regulation, and technological breakthroughs have important effects
on future automotive market. Big city populations are getting increase at
higher rate than any other. Traffic is grueling day by day. So, Dense urban
environment discourage private car usage. So, we can say that type of city will
become key indicator for future automotive market. We can enumerate future
expected developments able to change automotive market in near future (7):
*Shared mobility and connectivity services,
*Customer Segmentations according to city types,
*Solving of technological and regulatory issues,
*Widespread use of electrified cars
*Computerization changing the mechanical nature of cars
First month of 2016, Turkish local automotive market has
shrunk 4,9 % compared to same month of last year. Expected interest rate
increase of FED, economic developments in China economy, ongoing liquidation
operations led by European Central Bank, geopolitical risks, monetary politics
of Central Bank of Turkey will be main indicator of market along 2016.
According to Union of Automotive Industry Distributors, it is expected to come
to live of 2016 Sales around 900k-950k (13).
Global automobile suppliers market has positive outlook about
2016. Market’s utilization rates increased by 5 % through 85 % in 2015.
Finished goods inventory level has declined to 34 % from 51 % with better
solution in supply chain management.
Commodity Prices
Oil: After hovering around 30$ level for three months, Brent oil
prices headed up to 40$ level within March. Some investor keeps their position
as predicting brent oil prices will be 50$ too fast and too soon. On the other
the investors still continue to make short sell to oil based product companies
(9).
(Bloomberg, 10.03.2016)
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. 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 198 USD/Ibs within the
end of 2015. We see a small positive movement within 2016 through 222,45
USD/ıbs
(Bloomberg,
10.03.2016)
Steel: Similar 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 (11)
References
1.http://www.federalreserve.gov/newsevents/speech/fischer20160223a.htm
2.http://www.aljazeera.com/indepth/opinion/2016/01/china-economic-crisis-coming-160111090000623.html
3.http://www.bbc.com/news/uk-politics-32810887
4.http://www.economist.com/blogs/graphicdetail/2016/02/taking-europe-s-pulse
5.http://www.hurriyetdailynews.com/a-whiff-of-panic-in-the-kremlin-as-russias-economy-sinks-further.aspx?pageID=449&nID=94866&NewsCatID=396
6.http://www.economist.com/news/special-report/21689874-turkey-performing-well-below-its-potential-erdoganomics
7.http://www.mckinsey.com/industries/high-tech/our-insights/disruptive-trends-that-will-transform-the-auto-industry
8.http://www.thinkadvisor.com/2015/09/24/5-top-global-automotive-trends?page=6
10.http://www.bloomberg.com/quote/HG1:COM
11.https://www.steelbb.com/steelprices/
