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HÜSEYİN CAHİT SOYSAL
UGM Board Member
Increasing transportation costs due to problems in the Suez and Panama canals will increase general price levels globally. As European farmers, harassed by green agriculture strategies, move away from production, there will be difficulties in accessing food at the global level. Since Ukraine cannot transport agricultural products by sea, prices of farm products will increase globally due to the high costs of rail or road transportation.
2024 was also a fragmented year: Before March 31 and after March 31. It seems that all economic decisions have been postponed until after the local elections. Therefore, the regulations that will be put into effect after the election and their results will be evaluated for a small nine-month year.
However, global developments can lead to inferences about what 2024 will be like.
In 2023, the average global growth rate was 3.1%. In the same year, the growth rate of OECD (Organization for Economic Co-Operation and Development) countries remained at 1.6%. Türkiye exceeded the world average with a growth rate of 4.5%.
2023 GLOBAL EXPORT DATA…
According to World Trade Organization (WTO) data, global exports decreased in value throughout 2023. This decrease reached 6% by the end of the year. In 2023, international goods and services decreased by 1.5 trillion dollars compared to 2022, reaching 31 trillion dollars. Global inflation has been on the decline recently. In 2023, consumer inflation decreased from 4.27% to 3.71% in developed countries, while it remained stable at 6.5% in developing countries. In Turkey, where there has been a relative rate decrease, TÜİK announced that 2023 inflation is 64%. With this percentage, Türkiye ranks 5th or 6th among the highest inflation rates in the world.
In summary, the world is experiencing global contraction. The Russia-Ukraine War, the Israel-Hamas War, the conflicts between the USA and coalition forces, and the Yemen-Houthi Unions are some of the factors that caused global economic contraction.
SHIP ATTACKS OF THE HOUTHIS…
Since November 19, 2023, the number of ships attacked by the Houthis in Yemen for "carrying Israeli goods" has exceeded 40. The British Rubymar vessel, which the Houthis assaulted on February 18, 2024, sank on March 1. It is stated that the ship carrying large amounts of ammonia and oil could cause an environmental disaster. Thereupon, the international navigation security alliance led by the United States and the United Kingdom launched air strikes on the Houthis' military targets for the security of the trade route.
THE SUEZ CANAL HAS BECOME UNUSABLE…
The Suez Canal and Babülmandep Strait, which connect the Red Sea to the Mediterranean and through which around 35,000 ships pass annually, have become unusable for international cargo transportation. Commercial ships began to travel around Africa via the Cape of Good Hope and carry out transportation between the Far East and Europe. Therefore, while freight and freight insurance prices increase, fuel used throughout the expedition doubles.
PASSAGES THROUGH THE PANAMA CANAL HAVE SLOWED DOWN…
On the other hand, serious problems arose during the Panama Canal crossing, which connects the Atlantic and Pacific oceans. When the water in the lake in the middle of the canal decreased due to drought, the average number of ships passing in a day decreased from 36 to 18. Hundreds of boats are waiting in line for a long time to pass through the canal.
There are also problems in air transportation. Due to hot wars, planes still cannot comfortably use the skies of Russia, Ukraine, Israel, Syria, and Yemen for transit passages.
THE SEARCH FOR NEW ROUTES HAS GAINED SPEED…
These problems also trigger the search for new routes. Called India - Middle East - Europe Economic Corridor (IMEC) and called the "New Spice Road," "India - United Arab Emirates - Saudi Arabia - Jordan - via Israel's Haifa port to Piraeus Port of Greece and from there to A project is being worked on that aims to access Germany's port city Hamburg by road. Türkiye decided to support another alternative project. Within the scope of the "Development Road Project," which will start from the Persian Gulf and reach Türkiye via Divaniye- Najaf- Karbala- Baghdad - Mosul, the railway line to be built in Iraq will be connected to the railways in Türkiye, and container and wagon loads will be transported to Europe via this route. Is planned.
FARMER ACTIONS IN EUROPE…
Then, in early January 2024, farmer protests began to appear in Europe. Farmers who blocked highways with hundreds of tractors in many countries, such as the Netherlands, Belgium, France, Germany, Poland, and Romania, wanted to make their voices heard by the political authority with these actions. Reacting to the difficulties imposed by the "Farm to Table Agricultural Strategy" within the scope of the European Union's Green Deal, farmers came to the European Parliament building in Brussels, the capital of Belgium, with 1,200 tractors and closed the roads to traffic. This inevitably led to concerns about food supply shortages in Europe.
WHAT KIND OF PICTURE WILL BE ENCOUNTERED IN 2024?
In light of all these developments, it seems that the following picture will emerge in 2024:
-Due to the contracting economy, national income levels will decrease worldwide.
-At least for the first decade, we will have to trade with "countries with protectionist measures" instead of policies such as the "paving the way for the global economy" initiatives of the 1990s.
-Since "circular economy" trends will extend product life cycles, our exporters will not be able to find comfortable export markets to developed countries or country groups such as Europe and America as before.
-Increasing transportation costs due to problems in the Suez and Panama canals will increase general price levels globally.
-As European farmers, harassed by green agriculture strategies, move away from production, there will be difficulties in accessing food at the global level.
-Since Ukraine cannot transport agricultural products by sea, prices of farm products will increase globally due to the high costs of rail or road transportation.
Despite these negative developments, in line with the European Union's goal of "mapping the supply chain according to the immediate environment," the European Union will prefer Turkish agricultural and industrial products over products from distant countries such as China, India, Brazil, and Argentina.
-Undoubtedly, for our biggest market, the European Union, to be closer to Turkish products, Turkey - European Union relations will be improved, even if limited to the scope of "Updating the Customs Union," even though it seems significantly weakened.
When we reach January 1, 2025, we will see to what extent these determinations will come true. However, today, it seems we do not have the opportunity to paint a better picture.
