Posted on 26 May 2023
Turkey faces challenges in exports due to negative domestic and international developments impacting country’s competitiveness.
High costs and exchange rate disparities are causing market losses, but the reduction in electricity and gas prices has benefited exporters, the Türkiye Exporters Assembly (TİM) says in a statement seen by Kallanish.
In April, Turkey's exports amounted to $19.3 billion, indicating a decrease of 17.2% compared to the same month last year. January-April exports amounted to $80.9 billion, down by 3% on-year, says TİM, citing Turkey’s General Trade System (GTS).
The automotive sector, a large steel consumer, led the way with $2.7 billion, making it the largest contributor to Turkey’s exports in April. The remaining sectors in the top five were chemicals, generating $2.4 billion, followed by apparel with $1.5 billion, electrical and electronic equipment with $1.2 billion, and steel securing fifth place with $1.1 billion.
In full-year 2022, the steel industry made up 8.3% of Turkey's total exports, contributing $21.1 billion and holding fourth position, following the chemical, automotive, and apparel sectors.
The persistent stagnation in demand is being caused by monetary tightening policies implemented in Europe and the US, says Mustafa Gültepe, chairman of TİM.
The significant increase in costs has surpassed the rise in exchange rates, resulting in a loss of competitiveness of Turkish goods.
As Turkey struggles to meet competitive prices, foreign customers have been shifting purchases to competitor countries, with declining freight rates supporting this decision.
Gültepe emphasises the importance of maintaining exchange rates that at least match inflation levels to enable Turkish exporters to remain competitive. Failure to do so will result in continued market losses, which may take considerable time to recover from.
The recent reductions in electricity and natural gas prices have had a positive impact on Türkiye's exporters. These price reductions have particularly benefited sectors that heavily rely on energy, resulting in cost savings.
The iron and steel sector, known for its high energy consumption, experienced a significant decline in April. Compared to the same month the previous year, there was a decrease of 45% in quantity produced and 41% in value within this sector, according to the Mediterranean Ferrous and Non-Ferrous Metals Exporters' Association (ADMIB).
ADMIB president Fuat Tosyalı emphasises the need to reduce Türkiye's dependence on energy imports and implement renewable energy solutions to address this issue.
"We need to implement solutions that will reduce our dependence on imports in energy as soon as possible,” Tosyalı says in a separate note. “At this point, renewable energy investments should be supported and favourable conditions should be provided for the necessary financing.”
High energy prices, declining commodity prices, and exchange rate fluctuations have contributed to the decline in exports, he adds.
Despite the challenging conditions, Tosyalı expresses optimism for the second half of the year, anticipating increased industrial production and improved export figures.
In April, Germany emerged as the top destination for Turkey's iron and steel exports, with a value of $206.8 million. Israel and Italy followed with exports valued at $110m and $104.6m, respectively.
Source:Kallanish
