Despite the remarkable recovery since the economic nadir in 2001, one aspect of the Turkish economy that has continued to worry analysts is the trade deficit, which leapt by 55% in 2004 to $34.3bn, causing a current account deficit equivalent to 5.3% of GNP for the year.
Those in business circles have complained that the growing strength of the Turkish lira has undermined exports, which will be vital if the current account deficit is to be narrowed and full economic recovery achieved. January bought further concern, with imports up by 10.6% on the same month last year, but exports edging up by just 0.3%. However, a surge in February exports meant that figures for the two months together were up 27% on the 2004 equivalent.
Huge growth in automobile exports – up 91.9% on the same month last year – helped the overall figures, and further rapid escalation is expected for the sector. The president of the Istanbul Chamber of Commerce, Mehmet Yildirim, promised that the $10bn taken on automobile exports in 2004 would be doubled over the next two years, and the industry was also boosted when South Korean car manufacturer Hyundai announced plans to expand its plant in Turkey at the end of this year, Reuters reported on March 1.
“It’s not easy to achieve that kind of increase in exports when interest rates are down,” admitted Turkish Minister of State Kursad Tuzmen on March 2. “Still, our exporters can make it.” He continued in the same confident vein, stating that “The distressing period of January is now over,” and claiming that Turkey did not have a balance of payments problem. The country’s export market is experiencing a “general upward trend”, said the minister.
Indeed, Tuzmen was speaking from Minsk, Belarus, where he was leading a delegation of Turkish parliamentarians and businessmen on the first-ever official Turkish visit to the politically isolated state.
Tuzmen was negotiating with Belarusian Premier Aleksandr Lukashenko to ease some of the country’s notoriously unpredictable bureaucratic hurdles for Turkish businessmen looking at the country as a potential export market. “If we capitalise on even 1% of our trade potential,” said Tuzmen, “we could reach a bilateral trade level of $1.9bn”. Tuzmen explained that he wanted “to implement projects which will increase trade volume with all eastern European countries”. He added that “Our businessmen are able to take risks and be successful under [difficult] conditions. Our goal is to be part of the market whatever the circumstances are.”
This drive to tap some of Europe’s more challenging markets was also in evidence two weeks earlier when Prime Minister Recep Tayyip Erdogan visited Albania and Bosnia-Herzegovina, with the Turkish premier signing a new bilateral trade treaty in Tirana and a double taxation treaty in Sarajevo.
Indeed, while Tuzmen was shivering through negotiations in chilly Minsk, Erdogan was sunning himself in the Ethiopian capital of Addis Ababa, continuing his recent busy schedule of foreign visits.
Erdogan was accompanied on the trip by around 100 Turkish businessmen eager to take advantage of the potential for new business links and export markets. He said that the visit showed “how much importance Turkey attaches to Ethiopia, which is one of the largest markets in Africa.”
On March 3, Erdogan continued on to South Africa, where agreements on customs and trade co-operation between the two countries were signed. At a joint press conference, Erdogan noted that current bilateral trade stands at around $1.2bn, but is strongly balanced in favour of South Africa. The Turkish premier said that attempts would be made to boost Turkish exports to the country so as to balance out the level of trade.
To aid this process of expansion, and help out potential exporters who are willing to take risks, Tuzmen recently announced that Turkey plans “to establish trade teams to assist our exporters”. These will be drawn from the ranks of the Turkish Exporters’ Union (TIM) and the Turkish Union of Chambers and Commodities Exchanges (COBB), and will be based abroad to help Turkish exporters overcome difficult situations on the ground.
Alongside this drive to explore new directions, efforts have been made to consolidate links with more established trading partners. In mid-January, Erdogan visited Moscow, where Turkish companies have been investing heavily in retail and construction. Bilateral trade volume, currently around $10bn, “could reach $15bn by 2005 and $25bn in 2007”, Russian President Vladimir Putin said after meeting the Turkish leader. Erdogan also opened a Turkish trade centre in the Russian capital.
Returning to the shorter term, Turkey’s goal is to increase overall exports by 15% in 2005 to $72bn, and the February figures provide some hope that the target may be achieved. “The figures are good and suggest that the momentum is likely to continue,” Yarkin Cebeci, economist at investment bank JP Morgan, told the press March 2.
However, not everyone is quite so confident. TIM Chairman Oguz Satici pointed out that the 2004 current account deficit was only just short, percentage-wise, of the deficit on the eve of the 2001 crisis. “That puts us in a risky situation,” he told the press on March 2. “The export community is awaiting a more solid policy for financing the current account deficit.”
Hopefully the latest developments will at least prove to be a step in the right direction.
