During his speech Erdogan noted the strong trade growth that Turkey has experienced in recent years, with the country’s foreign trade volume rising from $20bn in 2000 to $47.3bn in 2003, $60bn in 2005 and an estimated $83.5bn in 2006. When revenues are added in from the “shuttle trade” – in which individuals come to Turkey as tourists, primarily from the countries of the former Soviet Union, to buy goods for resale in street and local markets back in their home country – the 2006 total trade figure is boosted by an additional $4.5bn to some $88bn. According to projections, export trade should reach some $95bn in 2007, with an additional $4.9bn in shuttle trade, for a total of $99.9bn.
Also speaking at the opening of Foreign Trade Week, Turkish State Minister Kursad Tuzmen highlighted the expansion of foreign trade since the early days of the republic. “When the republic was founded in 1923, our yearly export figure was $51m. Turkey now exports goods worth $51m every five hours.” Tuzmen went on to add that Turkey is one of the world’s top 20 economies and that Turkish exporters are now playing in “the champion’s league”. As of year-end 2005, the International Monetary Fund ranked Turkey as the world’s 19th largest economy with a GDP of $569bn at purchasing power parity (PPP), while the World Bank places Turkey in 17th place with a GDP of $612bn at PPP.
But it wasn’t all congratulations at Foreign Trade Week. Tuzmen also noted that there will be much more hard work ahead if the country wants to remain competitive in the global market. “To be able to maintain the success we have obtained, we need to focus on implementing reforms to increase microeconomic and sectoral efficiency.” Tuzmen also served local firms with a word of warning: “From now on, companies must act like sharks in the global economy. Whoever stops swimming will die. We need to invest in manpower in order to adapt to the competition and continue our productivity.”
Oguz Satici, chairman of the Turkish Exporters’ Union (TIM), echoed Tuzmen’s sentiments in his remarks, noting that in order to succeed in the future, “you must do the planning today”. He went on to add that despite its accomplishments so far, Turkey’s trade with some of the world’s biggest markets, such as the US, Japan and China, remains limited. Satici was optimistic about Turkey’s prospects in the long run though, pointing out that the country has managed to succeed despite its relative lack of natural resources compared to some of its neighbours in the region. “We are making the most of our insufficient resources and managing to accomplish what other countries do with much greater resources.”
One of the major problems for exporters remains the country’s high interest rates, which have been raised over the past year by the central bank to 22.5% to curb the risk of inflationary pressures. Speaking on October 31, at the first International Mid-Year Finance Conference, Satici said that high interest rates are hurting exporters and discouraging investment. “Interest rates should be brought down to an investment-, production- and export-friendly level.”
Despite Turkey’s rising trade figures, imports continue to outpace exports, fuelling the country’s trade deficit, which increased 21.5% year-on-year to $4.31bn in September 2006, according to figures released October 31, by the Turkish Statistics Institute (TUIK). While exports for the first nine months of 2006 were up a strong 13.4%, imports continued to rise at a more rapid clip, up some 17.8%.
Yarkin Cebeci, an analyst for JP Morgan, estimates that the current account deficit will increase to some $30.5bn, or 7.8% of GDP, in 2006 if the gap between imports and exports continues to grow at the same pace. In the longer term, however, the decline in the value of the lira in 2006 should translate into stronger export earnings and declining imports, as the weaker lira makes imports more expensive and Turkish goods more competitive abroad.
In spite of the challenges faced at home, Turkish exporters have had remarkable success in boosting the country’s trade figures, which should continue to grow at a rapid pace as domestic economic and policy conditions improve.
