Turkish exports grew by nearly 20 pct to record-high $134.6 bln in 2011
In the past two years Turkey's exports grew by some 35 percent
Turkey had its largest export earnings ever with nearly $135 billion in 2011, Economy Minister Zafer Çağlayan said on Monday, cited by Zaman newspaper. That was up by over 18 percent compared to a year earlier when the country sold $114 billion worth of goods to overseas markets after its export volume dropped below the $100 billion mark because of the global financial crisis in 2009 when its domestic output also shrank by nearly 5 percent.
In the past two years, therefore, official data show that Turkey's exports grew by some 35 percent at a time when there are grave risks in Europe, Turkey's largest export market. "This record was made real not in a garden of roses. It is the outcome of efforts by exporters who did business with critical regions that have turned into a powder keg with high competition amid political and economic depressions," Çağlayan said. The $12.8 billion revenue earned from exports in December alone was the highest monthly figure in the past 37 months. The figures were announced at a Turkish Exporters' Assembly (TİM) meeting in Ankara.
According to TİM data, Turkey's largest exports were motor vehicles at more than $20 billion in 2011. This was followed by chemical products and ready-to-wear clothing, each bringing more than $16 billion in revenue to the country. Steel exports came in the fourth place with some $15 billion.
Monday's figures were also significant in terms of the performance Turkish exporters showed in the past decade during which the country's export volume nearly quadrupled, although it does not have wealthy energy reserves, unlike most of its neighbors to the East and South. Turkey's export revenue was at $35 billion in 2001.
What is more cheering for observers than the country's booming exports is the fact that its foreign trade deficit, and thus its current account deficit (CAD), started to decline before it gets too late for Turkey to avoid a hard-landing after eight consecutive quarters of speedy economic growth.
CAD dropped by nearly 35 percent to $4.2 billion in October last year compared to a month earlier. Its foreign trade gap, likewise, narrowed by 3 percent year-on-year to $7.5 billion in November 2011, signaling that Turkey has finally managed to find a cure, albeit partial, to stem the rise of its CAD, the most serious risk the country's economy faces according to the government and experts.
Arising mainly from what has so far been an unavoidable foreign trade deficit, CAD has, too, become a structural issue, particularly in the past two years when it had a strong recovery from the global financial crisis of 2008 and 2009.
Gross domestic product (GDP) resumed its rapid growth in the final quarter of 2009, continuing to expand by 8.9 percent in 2010 and another 9.6 percent in the first three quarters last year. Its energy bill, however, got way heavier as its industries needed more energy to meet the increasing demand for Turkish goods in and outside the country, while they were relying mostly on foreign supplies for the intermediate goods they also needed for production of finished goods.
As a result, the CAD spiked to nearly 9 percent of GDP, sending shockwaves through capital markets and forcing the lira further southwards against a basket of major currencies including the US dollar and euro. The news related to the decline in both the foreign trade deficit and CAD, therefore, was received with much joy by government representatives, including Çağlayan who say the reductions are not a coincidence but represent a trend that will continue as a result of fiscal and monetary measures.
Since late 2010, the Central Bank of Turkey has been applying a lower interest rate and higher required reserve ratios policy mix to both make Turkey less attractive for highly volatile short-term international capital and more difficult for people in Turkey to take out loans from banks to stem the rise of the country's CAD.
Coupling those monetary measures, the government has increased what is called the private consumption tax (ÖTV) on certain products heavily imported from overseas, such as cars and mobile phones, to reduce their consumption in Turkey. What has also contributed to the country's fight against a net foreign exchange flight out of Turkey because of its CAD was a weaker lira. Last year, the US dollar rose from TL 1.54 to just below TL 1.90 whereas the euro jumped from TL 2 to nearly TL 2.5.
More needed to meet 2023 target
As it recorded nearly a 20 percent exports growth last year, Turkey has strengthened its position as a larger exporter than all its neighbors with which it has a land border. It is also the second largest exporter in the Middle East and the Black Sea region after, respectively, Saudi Arabia and Russia, two of the world's largest energy exporters. Turkey's main exports, on the other hand, are motor vehicles, petro chemicals, metals and textile products, and the country spends nearly $50 billion each year to buy oil and natural gas from overseas.
The success of Turkish exports, however, should not overshadow the fact that more needs to be done for the country to achieve an export volume of $500 billion by 2023, as mentioned in the Justice and Development Party (AK Party) government's centennial targets. This year, the executive expects the country's exports volume to top $149 billion, or some 11 percent more than in 2011.
And should that same rate of export growth be sustained through 2023, Turkey's export volume will become some $470 billion, still below the targeted half a billion dollars. "Our potential for reaching high acceleration through new growth strategies and, particularly, regional integration plans is still standing right ahead of us, and we are supposed to do this cleverly. Yes, it is true that our exports have climbed to an all-time-high level, but there is still much more to be done," said Anatolian Lions Businessmen's Association (ASKON) President Mustafa Koca.
To this end, Çağlayan said Monday that an important incentive package will be announced before the end of this month. "We are working on this very discreetly and intensively," he said. The package is expected to facilitate domestic and foreign investments in certain fields where Turkish industries are dependent on foreign supplies. The minister said the members of the Economy Coordination Board (EKK) would be briefed about the contents of the package later on Monday.