Analysis
Trade

Turkish exporters cautiously optimistic for rest of year

May 10, 2024, 3:53 AM

Workers at a textile factory in Istanbul. Turkish exporters are hoping for an increase in shipments to the Middle East

Exports on track to beat 2023 figure
Trade deficit down by 41%
Halt to Israel trade could cost $7bn

Turkish exporters are predicting a strong second half of the year, with expectations of increased shipments to traditional markets and growth into the Middle East.

There are lingering concerns that global risk factors will blow a chill wind over sales, however.

Turkey’s exports accelerated 3.6 percent in the January to March quarter, with sales worth $64 billion, according to data issued by the state statistics agency Turkstat at the end of April. By contrast, imports fell 13 percent year on year in the first quarter to nearly $84 billion.

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Narrowing the trade deficit, both through boosting outbound shipments and curbing imports, is one of the key planks of the government’s efforts to rebalance the economy.

High interest rates are being used to cool consumer demand for overseas products and broader domestic spending.

The policy is having an impact, with the first-quarter trade deficit narrowing by 41 percent to $20 billion in the first three months of the year.

The strong first-quarter results indicate that exports are in line to beat last year’s record total of $256 billion, according to Mustafa Gültepe, president of the Turkey Exporters Assembly (TİM).

“I believe that the increasing trend in our exports will continue parallel to the revival in the European and US markets in the second half of the year,” he told AGBI.

Strengthened trade ties in the Middle East will also help sustain this growth, Gültepe said, with the UAE and Saudi Arabia being targeted as key markets.

“We increased our exports to the UAE by 63 percent to over $8.5 billion in 2023, reaching a record high foreign trade volume between our countries,” he said.

“As producers and traders we have reached the point where we can increase our trade volume exponentially.”

Though looking to break records the TİM president has also sounded a note of caution, saying a number of factors could weigh on Turkey’s export trade.

“In global trade things may not always go the way we want,” Gültepe said.

“Over the last two years the slowdown in demand in global markets, regional conflicts and the extraordinary increase in domestic production costs have damaged our competitiveness.”

More issues are likely following the Turkish government’s announcement at the beginning of May that it was suspending all bilateral trade with Israel. A resumption is conditional on a permanent ceasefire in the Gaza conflict and the unfettered flow of humanitarian aid into the territory.

This embargo is likely to trim $7 billion from this year’s projected export total of $267 billion if not lifted, TİM has estimated, with shipments to Israel already down 24 percent year on year to April.

Last year Turkey exported $5.4 billion worth of goods and services to Israel, offset by $1.6 billion of imports, making Tel Aviv one of the few of Ankara’s major trading partners with whom it enjoyed a significant surplus.