Turkish exporters are revising their year-end targets downward, in a move that could derail the government’s economic plans, as new orders fall amid signs of a global slowdown and inflationary pressures, Reuters reports.
Turkey’s exports rose 19 percent year-on-year in the first seven months of 2022 to $144.4 billion, but deteriorating global conditions, exacerbated by the war in Ukraine, have raised concerns for the rest of the year.
The trade deficit jumped 143 percent over the same period to $61.9 billion, largely due to rising energy import costs, even as exports hit record levels.
The darkening outlook for exports threatens President Erdogan’s economic plan, which aims to reduce inflation, which was near 80 percent in July, turning Turkey’s chronic current account deficit into a surplus.
Seref Fayat, head of the TOBB Clothing and Apparel Board, said the apparel industry’s year-end export growth target had been reduced from 15 percent to almost no growth.
“As we see a slowdown in new orders from the US and European markets in recent months, we have lowered our target,” he told Reuters, adding that he expected exports to remain flat from last year or increase slightly.
Turkey has set an export target of $250 billion for this year, after reaching $225 billion in 2021.
Automakers, which are among Turkey’s top exporters, are also revising their targets downward. Tofas cut its export target by more than 10%, while Ford Otosan cut it to 330,000-340,000 units from 350,000-360,000.
Ferdi Erdogan, deputy chairman of the Turkish Association of Construction Materials Manufacturers (IMSAD), told Reuters that the euro’s weakness against the dollar was another risk.
Trade Minister Mehmet Mus said on Wednesday that Turkey’s export figures for the first seven months of this year would have been $7 billion higher if the euro had not weakened against the dollar.
TOBB’s Fayat said the euro’s weakness had also hit the apparel sector, as the European Union was Turkey’s biggest export market, accounting for $93 billion or 41.3% of exports in 2021.
“The current levels of the euro will lead to a 7-8% drop in revenue and 5% in profits for Turkish garment exporters,” Fayat said.
Source: Capital
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