Turkish exporters are revising downward year-end targets in a move that could derail the government’s economic plans as new orders drop amid signs of a global slowdown and inflationary pressure, Reuters reported.
In the first seven months of 2022, Turkey’s exports increased by 19 percent year on year to $144.4 billion, but deteriorating global conditions, made worse by the conflict in Ukraine, have created fears for the remainder of the year.
Despite record export levels, the trade deficit increased by 143 percent in the same period to $61.9 billion, primarily as a result of growing energy import costs.
Export prospects are becoming increasingly bleak, posing a challenge to President Recep Tayyip Erdoğan’s economic strategy, which seeks to reduce inflation, which was close to 80 percent in July, by turning Turkey’s persistent current account deficit into a surplus.
The year-end export growth target for the apparel industry has been reduced from 15 percent to barely any growth at all, according to Şeref Fayat, head of TOBB Garment and Apparel Council.
“As we see a slowdown in new orders from US and European markets in the recent months, we have lowered our target,” he told Reuters, adding that he anticipates exports to be flat or slightly up from last year.
After hitting $225 billion in exports in 2021, Turkey has set a target of $250 billion for this year.
A further issue, according to Ferdi Erdoğan, vice chair of the Turkish Construction Material Producers Association (IMSAD), is the euro’s weakness against the dollar.
Mehmet Muş, Turkey’s trade minister, claimed on Wednesday that the country’s export figures for the first seven months of this year would have increased by $7 billion if the euro hadn’t fallen against the dollar.
Given that the European Union was Turkey’s largest export market, accounting for $93 billion, or 41.3 percent, of exports in 2021, TOBB’s Fayat claimed that the garment sector had also been impacted by the depreciating euro.
Current euro exchange rates will cause Turkish garment exporters’ sales to decline by 7-8 percent and their profits by 5 percent, according to Fayat.
The largest exporters from Turkey, the auto industry, are likewise lowering their goals. Ford Otosan decreased its objective from 350,000–360,000 units to 330,000–340,000 units, while Tofas slashed its export target by more than 10 percent.