EXPANDING ABROAD
urkey’s industrial sector has long been a source of dynamism and employment for the economy, and has steadily accounted for around one-third of the economy’s GDP. Turkey’s labor costs are a fraction of those in Europe, and its education and technology levels are far greater than neighboring Middle Eastern countries—factors making it a steady destination for domestic and foreign investment.
The industrial sector’s success has acted as a barometer for the economy’s overall health, so when industrial output fell YoY for the 13 months following the 2018 financial crisis, economic confidence suffered. However, in September 2019, the sector released output figures showing a 3.4% YoY increase and a 3.2% MoM increase. It began to feel as if the sector has its swagger back.
Chief to the sector’s survival and nascent success have been exports, which for the first nine months of the year climbed by an annual 2.6% to USD132.5 billion. Turkish exports have a notable Western orientation, with Germany, the UK, Italy, and US among the top-five destinations, and Europe alone accounting for around 60% of exports. Turkey’s dependence on Western demand could prove perilous, with sanctions threats emanating from both the US and the EU during 2019 in re
Tsponse to Turkish geopolitical maneuvering. However, as a sign of Turkey’s efforts to diversify its export markets, Iraq cracked the top-five export destinations according to recent figures— an encouraging sign of the country’s stability and Turkey’s position to capture increased demand in the region. Syria has also been cited as a target market for Turkish exporters keen to service demand as the country stabilizes.
Turkey indeed has a plan to diversify its export markets. The Ministry of Trade in August unveiled a roadmap for diversification, targeting 17 countries where it aims to double its exports. These countries include the US, Brazil, China, Ethiopia, Morocco, South Africa, South Korea, India, Iraq, the UK, Japan, Kenya, Malaysia, Mexico, Uzbekistan, Russia, and Chile—countries that currently account for a quarter of current Turkish exports.
The roadmap also includes five target sectors to be prioritized for export growth: machinery, automotive, electric-electronic, chemical, and the food industry. State-owned Türk Eximbank is key to the roadmap’s growth strategy. The bank, which finances around 27% of Turkish exports, cited the five target sectors in addition to high-technology products as areas of growth for its loan portfolio. ✖
İhsan Necipoğlu
PRESIDENT, DOW TURKEY AND CENTRAL ASIA