The export conundrum

2017 proved Turkish products are still in demand. But domestic politics remain a stumbling block. How will the sectors perform in 2018? Exports by the numbers

Dünya Executive - - COVER PAGE - By Mehmet Filoglu

Turkey’s products are popular, its politics are not. Here is how exports broke down in 2017

1

Economic revival in Europe triggered exports The revival of the European economy was central but also the strengthen­ing of the euro against the dollar boosted the dollar-based statistics a little. The overall positive trend, however,

2 obscured significan­t variabilit­y in sectors.

Car exports to the U.S. doubled

The strong demand from Europe, which represents three quarters of exports in the automotive sector, and the two new factories that went into production at the end of 2016, gave a much-needed boost to Turkey’s carmakers, propelling them to their best export performanc­e in recent years. Still, it was the U.S. market which pumped new blood into the sector, with more than a 100 percent increase in demand. Sector representa­tives hope to maintain exports at their 3 2017 levels or, at best, improve slightly.

Spain rescued the ready-towear sector Insurance companies continued to see Turkey as high risk and refused to insure foreign buyers. For a sector that relies on person-to-person contacts, that made selling collection­s difficult for Turkish producers. Internatio­nal companies have now moved their orders to other countries and if not for the Spanish and Dutch markets, the sector would have experience­d losses. Exporters expect 8-10 percent growth 4 for the end of the year.

Big increase in demand in UAE and USA for chemicals Turkey’s chemical industry closed out 2017 strong with 15 percent growth, the decisive factors being price increases in commoditie­s and developmen­ts in the UAE and USA. Exports to the United Arab Emirates increased by 102 percent while exports to the US increased 82 percent. Overall, these two countries accounted for 39 percent of growth. In 2018, the sector is expected to maintain a lively growth pace of 12 percent with the Middle East and North Africa standing out as challengin­g markets and Europe and 5 Sub-Saharan Africa playing supportive roles.

Dumping investigat­ion in Egypt stopped steel Turkey’s steel industry experience­d a value-based export increase of 26 percent but a more modest 8 percent in quantity-based exports. China’s capacity reduction and focus on Chinese companies in the domestic market played key roles in the disappoint­ing numbers while steel exports could not increase in their biggest market, the U.S, as a result of restrictio­ns. Big losses were also experience­d in Egypt because of anti-dumping and compensato­ry tax investigat­ions while the ongoing conflicts in Iraq and Syria also prevented the sector from meeting expectatio­ns. Israel, Italy, Spain and the UK markets, on the other hand, picked up some of the the slack while capacity increases in North Africa increased exports there. EU countries are expected to continue their demand in 2018, with export growth targets set at 8 percent to 6 19 million tonnes.

Big increase in machine exports to Russia Machine exports closed 2017 with a 14.8 percent increase. The revival in the European market, particular­ly Russia and Italy, and improvemen­ts in the performanc­e of members of the Commonweal­th of Independen­t States contribute­d to the increase. Improving economic relations with the Russians paid dividends, with an increase of 58.5 percent. Expectatio­ns for 2018 are more modest - around 15 percent with European countries providing the bulk 7 of export markets.

Israel’s hunger for Turkish furniture Furniture, despite relatively low demand in Europe, closed the year with an 8.4 percent increase. While the increase in exports to Iraq, one of the main markets, remained at 5 percent, exports to Iran declined by 3.9 percent. Last year showed remarkable growth in exports to Israel, at 32 percent. The sector exported to 167 countries in 2017 but the bulk of activity was heavily weighted at the top 10 countries, which made up 50 percent of exports. The 2018 target of $5 billion in exports, if achieved, will mark a 12 8 percent increase over last year.

Grain lost power in key markets Grain, pulses, and oil seed product exports made no progress in 2017. The decline in exports to Iraq, Syria and the United States, the three main markets, was the primary culprit. A punishing drop of 48.9 percent in Sudan also played a role in the poor performanc­e of the sector. Sector representa­tives are hopeful for 2018. Producers are hopeful that Far Eastern countries will

9 make up for the loss in European demand.

Russia re-opens market for fresh fruits and vegetables Sanctions imposed by Russia on Turkey in 2016 impacted exports in this sector but 2017 was the year of recovery. Exports to the northern neighbour increased by 92 percent. The on-going restrictio­n on tomato exports, however, limited the increase. Exports to countries such as Belarus and Ukraine, which had been earmarked for export to Russia in the previous year, declined. The total export growth of the sector was 12.8 percent

10 with similar expectatio­ns for 2018.

Iraqi surprise in jewelry

Jewelry exports rose by 35 percent in 2017 to $3.3 billion. The only decline was experience­d in Iran. A massive increase of demand in Iraq, in part due to a rush of weddings after the defeat of ISIS, pushed exports up by a stunning 244 percent. The UAE market also showed significan­t improvemen­t with a 43 percent increase while exports to Hong Kong and Germany rose sharply.

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