Ahmet Zorlu

The pandemic disrupted the recovery in the global economy.

Beyond the global health crisis, the pandemic, which became a part of our lives in 2020, has dominated the agenda with its macroeconomic impact. As the restrictive measures taken to curb the spread of the virus throughout the world have taken their toll on global economic activity, production and trade volumes have plunged, with a contraction on both the supply and demand fronts.

In order to mitigate the effects of the pandemic on the economy, many countries have introduced large-scale financial measures and support packages, while central banks have turned to expansionary monetary policies.

The US Federal Reserve (Fed) gradually lowered its policy rate from a 1.50-1.75% band at the end of 2019 to 0-0.25%, and aimed to meet the short-term liquidity needs by implementing Treasury and private sector bond purchases. The European Central Bank (ECB) maintained its deposit interest rate steady at -0.5%, while ramping up its asset purchases and long-term re-financing operations to support liquidity. Likewise, the Bank of England (BoE) and Bank of Japan (BoJ) also stepped up their asset purchases.

Although expansionary policies have created an abundance of liquidity in the markets, there have been significant increases in capital outflows from developing countries and a rise in country risk premiums in parallel with the decline in global risk appetite.

While protectionist trade policies which remained in place throughout 2020 exacerbated the contraction in global trade, customs duties remained at high levels despite the phase one trade agreement signed between the United States and China at the beginning of the year, with the trade war continuing. At the end of the year, the signing of an agreement between the EU and the UK to regulate post-Brexit trade was a positive development which eliminated uncertainty on this issue. While the impact of geopolitical developments on economic activity on a global scale has also come under the spotlight, the developments in the US presidential election and their aftermath in the last quarter of the year have resonated on the world political scene.

In 2020, a year when the world’s leading economies, indeed almost all economies, recorded a sharp contraction, especially in the second quarter, European countries suffered the deepest economic damage, while China was the only major economy to end the year without a contraction, having brought the pandemic under control in the summer.

In its January 2021 World Economic Outlook report, the IMF predicted that the global economy would contract by 3.5% in 2020, having predicted a 4.4% contraction in its previous report, due to a stronger-than-expected recovery in the second half of the year. It also revised its growth forecast for the global economy for 2021 from 5.2% to 5.5%.

The prevalence and success of the vaccine rollout will play a key role in setting the course of the global economy in 2021. However, the uncertainty surrounding the efforts to bring the pandemic under control due to new variants of the virus had a downward impact on short- and medium-term forecasts.

The Turkish economy displays strong resilience in the face of the pandemic.

After its balancing process, the Turkish economy, which had begun to build back growth momentum, grew by 4.5% in the first quarter of 2020. However, this was followed by a sharp contraction of 9.9% in the second quarter due to the pressure from lockdown measures implemented to tackle the pandemic. In the third quarter, domestic demand surged with the help of financial support and measures implemented and the economy recorded a V-shaped recovery, with growth in the third quarter reaching 6.7% year-on-year. Thus, the Turkish economy grew by 0.5% in the first 9 months of the year, while the New Economic Program projected a 0.3% growth for the full-year 2020.

The current account balance, which yielded a surplus in 2019, posted a deficit in 2020 due to the impact of the foreign trade deficit, which had widened on the back of a decline in exports due to global contraction and increased gold imports, as well as the losses experienced in the tourism sector owing to the pandemic. The need for external financing increased due to deterioration in the current account balance, with weakness in foreign capital flows piling pressure on the foreign exchange reserves and exchange rates.

Inflation, which had remained at moderate levels due to weak demand conditions in the first half of the year, edged higher with increasing volatility in financial markets and exchange rates and revival in domestic demand along with normalization in the second half of the year, and annual CPI inflation ended the year at 14.6%.

In June 2020, the CBRT ceased the interest rate cuts which had continued for about a year and implemented a tight monetary policy along with simplification steps from September and raised the policy interest rate from 8.25% to 17% by the end of the year. The CBRT is expected to maintain its tight stance for the most of 2021.

The Turkish Lira began to gain ground against foreign currencies when the Central Bank abandoned the multi-interest rate system and increased the policy interest rate. In parallel with this, Turkey’s 5-year CDS premium fell to below 350 basis points in December from the 650 basis points reached in April.

Vestel Beyaz Eşya successfully passed an important test.

During this difficult pandemic process, Vestel Beyaz Eşya rapidly implemented practices which center on employee and community health, and contributed to ensuring sustainability in production and employment.

Vestel Beyaz Eşya set an example with the protective and preventive measures which it put in place in its factories and other areas, as well as in its production processes in order to protect its employees and their families and its efforts were recognized with the award of a TSE Safe Production Certificate. Combining its capabilities from being a powerful technology company with an agile and effective management approach, Vestel Beyaz Eşya continued its activities without interruption, with the exception of a one week halt at the beginning of the pandemic.

Taking on a key responsibility in supporting the nationwide fight against the virus, Vestel Beyaz Eşya donated products to health institutions in many parts of the country in order to support the heroes of the hour, our healthcare workers, while also providing support with the temperature measurement, sampling and intubation cabinets, which it has developed. In addition, production of the ventilator manufactured by Vestel Beyaz Eşya is planned to start in 2021.

Sweeping measures and restrictions, as well as the shock and uncertainty caused by a sudden change in people’s lifestyles negatively affected sales in domestic and export markets, especially in the second quarter of the year. However, this was followed by a rapid recovery in the second half of the year driven by pent-up demand, increased use of white goods as people spend more time at home and consumers’ growing need for hygiene. Vestel Beyaz Eşya strongly benefited from this trend, which compensated for the losses made in the second quarter in export markets, and the Company successfully maintained its export volumes on a year-on-year basis. A similar trend was observed in the domestic market thanks to relatively less restrictive measures, the low interest rate environment in the normalization process which started in June and the record increase in housing sales, which triggered deferred demand and the low base effect from 2019 and Vestel Beyaz Eşya managed to increase its market share by significantly outperforming the market.

During this difficult period, as we responded to the expectations of consumers in the domestic market, we sought to remind them that we are always with them. Thanks to Vestel’s integrated retailing system, we have strengthened our connection with consumers through actions such as video service support, priority service for consumers over the age of 65 and privileged services for healthcare workers, as well as 24-hour delivery service in hygienic conditions throughout Turkey in online sales, in what is a “first” in the sector.

We have once again demonstrated our vision and superiority in R&D and innovation, which is our strongest suit, with our new products which meet the demand for hygiene and health-oriented products, which has grown during the pandemic. Refrigerators, washing machines, dishwashers and air conditioners using the Daylight Technology, which we have developed, respond in the best way to consumers’ demand for a safer, sterile and hygienic life. In the coming period, we will introduce more advanced products using UV-C technology to meet the growing demand for hygienic products.

As a manufacturing and technology giant which exports to 157 countries, we maintain our global cooperation while expanding our number of export destinations with the determination to further consolidate our global presence. The white goods we produce under the brand licensing agreement with Sharp play an important role in increasing our market share in Europe while standing out from competing products with the ratings they receive from the independent testing institutes in Europe. In the last quarter of 2020, Vestel Ticaret’s acquisition of the White Knight and Hostess trademarks held by Crosslee Plc, one of the key players in the UK white goods market, was a development which increased our claim in Europe, and the UK market in particular.

As one of the first companies to invest in Turkey’s digital transformation, Vestel Beyaz Eşya maintains its leadership in this regard. In this vein, about 90% of the Industry 4.0 transformation has been completed at Vestel City, and all processes from the entry of raw materials to the delivery of products can be monitored digitally from end to end with intelligent recognition systems. With the completion of this transformation, Vestel City will become a fully automated smart production complex. The pandemic process has clearly demonstrated the importance of this transformation in the name of business continuity.

Sustainability is at the heart of our business model.

We are heading towards a process where stakeholder-based, social-benefit-oriented approaches are coming to the forefront around the world, where all work is shaped around a focus on sustainability. As a reflection of these efforts, investing in employees, the environment and society is becoming an integral part of business for leading companies.

In line with the Smart Life 2030, we strive to develop an innovative perspective which will be a part of our corporate culture as we move towards achieving our goals for a sustainable future in this dynamic environment, where the great transformation being experienced globally is shaping the future and affecting our business.

We minimize the environmental impact of our production processes with innovative solutions supported by technology. We develop smart products which keep hope for the future alive. We also introduce innovative products which have features such as providing additional hygiene and sterilization and creating fermentation conditions, in addition to our products which are highly advanced with their energy efficiency and water saving characteristics. In developing our projects, we internalize a 360-degree understanding of sustainability where we think about our entire world.

Within the framework of gender equality, we carry out our Women Technicians Project, while with our social awareness, we strive to provide greater space in business life to those with disabilities. We ensure that our products can be easily used by people with disabilities with the designs and arrangements we develop within the scope of our Accessibility Project.

We continue to transform the benevolence which runs in the DNA of the Zorlu Group into a structure where our employees can draw up their own volunteering projects and create collaborations and partnerships with our stakeholders with the Sparks movement, our corporate volunteering program which we launched within the scope of Smart Life 2030.

We always emphasize that we are on the side of our furry friends. Our Walker Project, which attracted a clutch of high-profile international awards last year, received the “Most Creative Volunteering Project” Award in 2020 in the “Heartfelt Awards” event organized by the Private Sector Volunteers Association. During the pandemic, we have continued to take measures to ensure our furry friends are not left hungry or thirsty.

Continuing to look to the future with hope…

During the pandemic, while remaining mindful of the importance of managing non-financial risks as well as financial risks, we also recognized the power of digitalization and sustainability in managing risks. We have once again seen that technology and innovation, one of the most important leverages in Smart Life 2030, represent a force that can create a multiplier effect.

Vestel Beyaz Eşya has been strengthened by this process, which confirms the astuteness of the Company’s future roadmap formed on the foundations of R&D, technology, innovation and value-added production.

Whatever the circumstances, as long as we have dreams, we will exist to produce more value for our world, our country and our stakeholders.

I express my sincere gratitude to all our stakeholders who share our hopes for a better future.


Ahmet Nazif Zorlu