Given that exports accounted for around 20% of Turkey’s GDP in 2012 – a good year for export growth – it is clear that the country’s overseas traders are clearly a vital part of its economy. Industry is a major contributor to exports, with manufacturing a particularly vital component of Turkey’s export picture. Yet challenges remain, particularly in boosting the contribution to value-added. In addition imports are still greater than exports, which has been disrupting the balance of payments and adding to current account risks.
The government’s national development strategy, Vision 2023 (see overview), seeks to address these issues by boosting the level of domestic industry through higher-end research and development (R&D), among other measures, while encouraging domestic industry to make more of its own intermediary goods (see Education & Research chapter).
At the same time, Turkey is seeking to leverage its advantages in new markets, producing quality goods at lower prices than its European rivals. Thus, its exports may become more visible in new markets such as Africa and Latin America, rather than in the fiercely competitive, yet declining, world to the north-west.
Facts & Figures
In 2012, out of a GDP of TL1.41trn (€610.8bn), free-on-board exports accounted for $152bn, or 19.6%, according to TurkStat figures that were released on April 1, 2013. This was an amount that was up 12.6% on 2011 in dollar terms, when the total stood at $135bn, and up 17.2% in Turkish lira terms. Both figures were far ahead of economic growth overall, which came in at 2.2%. Meanwhile, imports at cost, insurance and freight declined in dollar terms from $241bn to $237bn between 2011 and 2012, reducing the negative trade balance from -$106bn to -$84.05bn. In Turkish lira terms, imports remained static.
Looking forward, figures showed manufacturing responsible for some 93.1% of all exports in February 2013, down slightly from 93.8% in February 2012. For imports, intermediate goods accounted for 73.6% in February 2013, slightly down from 74.2% a year earlier.
According to TurkStat, automotives were the leading exports by value in February 2013, at $1.44bn for that month alone, out of a total value for exports of $12.43bn. Boilers, machinery and mechanical appliances and parts brought in $998m, and iron and steel contributed $919m – the top three exporters all belonging to the manufacturing and industrial sector.
In 2012 overall, the export rankings were slightly different. According to data from the Turkish Exporters’ Assembly, the automotive sector was still the top exporter, with $19.06bn, or 12.6% of the country’s export total. Following it were chemicals and chemical products, at some $17.54bn, or 11.6%, followed by ready-to-wear and clothing at $16.09bn. Metals then came in at $15.56bn, with electrical and electronic goods at $11.18bn. Looking at the year-on-year performance, automotives slipped in value terms – down 5.3% – as did ready-wear and clothing, which were down 0.4%. E&E remained roughly flat, while chemicals saw an 11.3% increase and iron and steel a 1.7% hike.
Examining this data, some clear characteristics of Turkey’s industrial exports segment emerge. Key here is the lack of correlation in 2012 between low overall growth on the trade side of GDP and a major shift upwards in exports. This might imply that what was being exported often represented a net deficit in trade terms – a factor often evident in segments such as chemicals, where TurkStat figures show imports at around three times the value of exports.
Here then, is where the importance of value added comes in. With three-quarters of all imports intermediate goods, replacing these with domestic equivalents also seems vital, requiring more investment in R&D and the development of more sophisticated domestic production facilities. At the same time, overseas markets may also have to change. With most Turkish exports having been directed to Europe for years, stagnant economic growth there should see a shift to newer markets elsewhere. More Turkish industrialists can be expected around Rio de Janeiro and Riyadh in the years to come.
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