Production of construction materials, which had followed a fluctuating course in the first half of the year, resumed an upwards trend in August. Production increased in 24 out of 26 subindustries. Exports in the industry increased by 2.1% while imports retreated by 9.9% throughout the period January-August. The construction industry, which is the primary industry among those which contribute most to the growth of Turkey, entered the last quarter of 2014 with positive expectations, thanks to the urban transformation activities that have recently gained pace. The urban transformation revitalized all sub-industries of the construction industry, and the construction materials industry was one of them. Total construction expenditures of Turkey reached TRY 82.3 billion in the first half of this year. Within this total, public and private investments have drawn attention to their similar growth ratios. Along with the third bridge and airport projects, public construction expenditures reached TRY 33.2 billion with the effect of huge ongoing infrastructure and superstructure investments. Private sector construction expenditures also displayed a real growth in the same period, increasing to TRY 49.1 billion. This growth in the construction industry has deeply influenced the construction materials industry. Domestic market of construction materials expanded by 13.7% in nominal terms in the first half of the year in comparison to the corresponding period of the previous year, reaching TRY 54.9 billion. TOTAL PRODUCTION OF CONSTRUCTION MATERIALS RESUMED AN UPWARDS TREND In the first three months of 2014, total production of construction materials was realized quite above the level achieved in the previous year. On the other hand, while the levels of production displayed by significant sub-industries in April and May remained below the levels achieved in the corresponding period in the previous year, total production observed in significant sub-industries of construction materials retreated in comparison to the corresponding month in 2013. In July, in which the number of workdays decreased due to the Ramadan Feast, levels of production displayed by 22 out of 26 industries shrank in comparison to July 2013. Production of cement retreated by 16.9%, ready-mixed concrete by 20.8%, stone and marbles by 22.4%, and plastic construction materials by 10.4%. In August, production figures resumed upwards trends in many sub-industries. With this growth achieved thanks to the increasing number of workdays in comparison to August 2013, increases of production were observed in 24 out of 26 subindustries of the construction materials industry. Cement, which holds a significant position among construction materials, increased its production by 4.1%, ready-mixed concrete by 10.3%, main iron and steel products by 12.7%, and paints by 12.3%. EXPORTS OUTPACED THE YEAR-END 2013 FIGURE IN THE FIRST 8 MONTHS OF THE YEAR The construction materials industry, which is the primary industry among those which realize the highest level of exports in Turkey, has displayed a successful performance this year as well. Throughout the first 8 months, annual exports of construction materials reached USD 21.6 billion. With this figure, construction materials exports achieved throughout the first 8 months outpaced the total exports of construction materials realized in 2013, with a rate of 1.8%. On the other hand, the deceleration observed in the construction industry of the European Union, and problems experienced by the regional countries gradually weakened the export performance of construction materials after the first quarter. While the top 20 countries to which Turkey exports construction materials remained the same, recoveries displayed by some of the current markets such as Germany, the UK, the USA, Romania, Egypt, Iran, the United Arab Emirates and Israel have reflected in the construction materials industry as rapid export growths. On the other hand, Russian, Iraqi, Saudi Arabian, Algerian and Libyan markets have incurred significant retreats. Throughout the first 7 months, imports of construction materials have been realized as USD 6.25 billion, decreasing by 9.9% in comparison to the corresponding period in the previous year. The recession in the construction industry and the increase of exchange rates paved the way for this retreat in imports. It can be seen that imports have been substituted by domestic supplies of materials. Throughout the first 9 months in 2014, construction materials, residence and workmanship costs have remained above the level of inflation. In comparison to the beginning of the year, residence construction costs increased by 9.3%, construction materials costs by 9.4%, and workmanship costs by 9%. A high level of inflation and increases in the exchange rates were among the primary factors driving the increases in construction material costs. ECONOMIC PRIORITIES: INFLATION, CURRENT ACCOUNT DEFICIT AND STRUCTURAL REFORMS In the new medium-term program covering the period 2015-2017, the amelioration of inflation and current account deficit as well as increasing the pace of structural reforms are seen as fundamental priorities. The program, the targets of which have been determined considering the relatively slow growth displayed by the global economy and trade, indicates that a tight monetary policy will be maintained and structural reforms will be emphasized in the economy. On the other hand, the target for economic growth, set as 5% for 2015, has been reduced to 4% for this year. With the support to be provided by structural reforms, Turkey aims to establish a growth model that is based on exports and advanced technology, utilizes domestic inputs, and produces value added products. Current account deficit is one of the most important debates concerning the economy of our country. Given the data pertaining to the first 8 months of the year, we can see that the current account deficit has significantly retreated in comparison to the corresponding period of the previous year, and decreased to USD 48.9 billion in annual terms by August 2014. This retreat of the current account deficit is expected to maintain a slowdown in the following months. In contrast to the first half of the year, re-entries of investments have been among the positive indicators of this year. Targets for Turkish economy have been set until 2017 with the medium-term program. However, according to experts, 2023 targets do not seem very realistic given the targets set for 2017 regarding national income, national income per capita and exports. Therefore, for 2023 targets, the importance of implementing 25 reform programs included in the new program development plan is emphasized. While a 3-4% overall economic growth is expected in 2015, the construction industry is expected to grow by 3.5-4.5%, and the domestic market of construction materials is expected to grow by 10-12% in nominal terms. The increase estimated for construction material exports in 2015 is 5-6%.