The seventh round of negotiations on Free Trade Agreement (FTA) between Pakistan and Turkey were being held in Ankara these days. Pakistan and Turkey will also discuss specific sectors, including textile, during the negotiations.
Free Trade Agreement (FTA) between Pakistan and Turkey is scheduled for signing on August 14 this year.
Pakistan’s trade balance with Turkey had remained positive until 2011. But it started decreasing after 2011 as a consequence of additional duties having been imposed by the two countries on various commodities.
Pakistan will get market access in Turkey in agricultural products and pharmaceutical sector. Pakistan’s major imports from Turkey include man-made textiles, towels, steel structure, tanning and plastic chemicals, processed milk and whey. At the same time, the country’s major exports to Turkey were rice, denim PET, ethanol, cotton yarn, fabric, garments, leather, carpets, surgical instruments, sports goods and chemicals.
Turkey's largely free-market economy is driven by its industry and, increasingly, service sectors, although its traditional agriculture sector still accounts for about 25% of employment. The automotive, petrochemical, and electronics industries have risen in importance and surpassed the traditional textiles and clothing sectors within Turkey's export mix. However, the recent period of political stability and economic dynamism has given way to domestic uncertainty and security concerns which are generating financial market volatility and weighing on Turkey’s economic outlook.
Since 2014, productivity and growth has slowed to reveal persistent underlying imbalances in the Turkish economy. In particular, Turkey’s low domestic savings and large current account deficit means it must rely on external investment inflows to finance growth, leaving the economy vulnerable to destabilizing shifts in investor confidence.
The economy contracted in the third quarter of 2016 for the first time since 2009, in part due to a sharp decline in the tourism sector, and growth is likely to remain below potential in 2017.
Other troublesome trends include rising unemployment and elevated inflation, which is likely to increase in 2017 given the Turkish lira’s recent depreciation against the dollar. Although government debt remains low at about 32% of GDP, bank and corporate borrowing has almost tripled as a percent of GDP during the past decade, outpacing its emerging-market peers and prompting investor concerns about its long-term sustainability.
Turkey-India FTA
On his visit in India Turkish President Recep Tayyip Erdogan on 1st May 2017, pitched for free trade agreement with India as a starting point to expand the ambit of bilateral economic ties.
The bilateral trade volume is skewed against Turkey. Of the total $6.5 billion trade, Turkey's export was only about $650 million.
Turkish companies have pumped in about $212 million whereas Indian investment in Turkey reads nearly $100 million.