Sanctioned Russia saved Turkish exports
export climate has been TURKEY’S adversely affected since the second half of 2022 after energy and labor costs soared, demand declined in the main markets, China, which had locked down during the pandemic, rapidly returned, and export orders were lost due to the pressure on the foreign exchange (FX) rates. Exporters experience significant losses in the European Union (EU), the U.S., the Middle East, and Africa. The substantial hike in exports to Russia and its neighboring countries limited the decrease in overall exports. Turkey’s exports to the Commonwealth of Independent States (CIS) soared by 58% in January-April. If exports to the CIS remained unchanged annually, the decline would reach 6.5% in overall exports.
Turkey’s exports decreased by 17% in April, according to the Turkish Exporters Assembly (TIM). The decline pointed out the most visible result of the ongoing problems in foreign trade since the second half of 2022. Turkey’s exports have started to slow since that period as energy and labor costs increased and recessia on concerns emerged in the EU and the U.S. Moreover, Turkish exporters, who lagged in price competition due to the FX rate suppression, which has systematically continued for a long time, have started to lose their markets in many sectors to China and Far East countries after the freight has returned to the pre-pandemic level. Russia, which is subject to Western sanctions, and the surrounding countries sustained Turkey’s exports in this composition.
Within this frame, Turkey’s exports declined by 3% from USD 83.4bn to USD 80.8bn in January-April, year-over-year, according to TIM. The decrease in exports registered to TIM was sharper in this period. The total exports of exporters unions dropped by 6.5% from USD 76.06bn to USD 71.16bn in the same period.
LOSS HITS 6% IN THE EU
Considering Turkey’s exports in terms of country groups, the overall outlook becomes clearer. Countries are separated into 12 groups in line with the methodology of TIM. While there is a significant decline in exports to all country groups, the export hike of 58% to CIS limited the loss in overall exports. Exports to the EU, the largest export destination of Turkey, fell by 6% from USD 32.6bn to USD 30.7bn in January-April, compared to the same period of the previous year. The cooling economy in the EU, where the interest rate has increased due to concerns over the recession, was the main factor in the decline in exports.
LOST MIDDLE EAST AND AFRICA TO CHINA
Turkish exporters, who couldn’t offer affordable prices due to overlapping costs, have lost the low-quality and low-price-oriented Middle East to China. Turkey’s exports to Middle East countries were down by 10.3% from USD 10.5bn to USD 9.4bn in the first four months of the year annually. A similar problem is experienced in affordable price-oriented Africa as well. Exports dropped by 27% from USD 7.7bn to USD 5.6bn in this period. There is also a decrease in exports to the North American Free Trade Zone, where the U.S. is included. Turkey’s exports fell by 24.2% from USD 5.6bn to USD 4.26bn to this region in the same period. Although it is a large market, Turkey’s exports haven’t reached the desired level yet.
RUSSIA AND CIS POSITIVELY DIFFERENTIATED
Turkey’s exports to CIS significantly increased in the first four months of the year. The country’s exports to Russia, which is subject to the Western sanctions following its invasion of Ukraine, and the surrounding countries jumped 58% in this period. Russia tops in CIS with the highest import increase from Turkey at 120% in the same period. Turkey’s exports to Russia climbed from USD 1.45bn to USD 3.2bn in January-April, year-over-year. Russia was followed by Azerbaijan and Kazakhstan, respectively. Turkey’s exports to Azerbaijan increased by 5.9% to USD 734.4m, and to Kazakhstan rose by 74% to USD 591.9m in January-April, annually. Belarus also was among the CIS countries where Turkish exports soared. Turkey’s exports surged by 70% to USD 469.8m to Belarus while its exports were up by 35% to USD 320.7m to Kyrgyzstan in January-April, compared to the same period of the previous year.