Turkish exporters have left behind yet another month on a high note, reaffirming the views that the annual target would be achieved even before the year-end.
Yet, industry representatives are said to be revising their targets as new orders drop amid signs of a global slowdown and inflationary pressure.
Turkey’s foreign sales jumped 13.4% year-over-year last month to $18.6 billion (TL 334.13 billion), marking the best July exports ever, Trade Minister Mehmet Muş said Wednesday. Imports rose at a much faster pace, jumping 40.8% to $29.1 billion.
Exporters have managed to achieve record sales in each month so far this year and in 21 of the last 23 months.
Sales rose more than 19% year-over-year in the first seven months of 2022 to $144.4 billion, Muş said, while imports were up 40.7% to $206.4 billion.
But deteriorating global conditions, exacerbated by the war in Ukraine, have raised concerns for the rest of the year. Russia’s invasion of its neighbor has sent global commodity prices soaring, endangering Turkey’s economic program that aims to tackle high inflation with a current account surplus.
The trade deficit surged by 144.5% to $10.6 billion in July, data from the Turkish Exporters Assembly (TIM) showed. The shortfall in the first seven months jumped by 143% to $61.9 billion, mainly due to rising energy import costs.
Exports had ended 2021 at $225.4 billion, a figure that government and economists expected to reach $250 billion this year.
The 12-month rolling exports have topped $248 billion as of July, said Mustafa Gültepe, head of TIM.
“At the point where we are now, we see that we will exceed our annual export target of $250 billion and leave behind a very important threshold in 2022,” Gültepe said.
The chemicals industry topped the list among sectors with $2.9 billion worth of sales in July, the data showed, a 54% year-over-year increase. Automotive followed with $2 billion, while ready-to-wear and steel industries reported $1.6 billion of exports.
Germany remained the top buyer of Turkish goods with nearly $1.49 billion, a 3% year-over-year rise. Sales to the United States, the second largest market in July, rose 24.8% to $1.32 billion, while exports to the U.K. jumped 3.6% to just over $1 billion.
Most imports came in from Russia, with purchases soaring by 78.1% to $4.37 billion, the data showed. Imports from the other two import sources, China and Germany were up 43.2% and 9.3% to $3.81 billion and $1.78 billion, respectively.
Yet, exporters are concerned over the stagnation in global markets that threatens to hit their sales.
Şeref Fayat, head of TOBB Garment and Apparel Council, said the clothing industry’s year-end export growth target had been lowered from 15% to hardly any growth at all.
“As we see a slowdown in new orders from U.S. and European markets in the recent months, we have lowered our target,” he told Reuters, adding that he expects exports to remain flat compared to last year or rise slightly.
Carmakers, who are among Turkey’s top exporters, are also revising down their targets. Tofaş cut its export target by more than 10%, while Ford Otosan reduced it to 330,000-340,000 units from 350,000-360,000.
Ferdi Erdoğan, deputy chair of the Turkish Construction Material Producers Association (IMSAD), told Reuters the weakness of the euro against the dollar posed another risk.
Muş said Wednesday that Turkey’s export numbers for the first seven months of this year would have been $7 billion higher had the euro not declined against the dollar.
TOBB’s Fayat said the weakening euro had also hit the apparel sector given that European Union was Turkey’s largest export market, accounting for $93 billion, or 41.3%, of exports in 2021.
“Current levels of the euro will lead to 7%-8% fall in revenues and 5% fall in profit of Turkish apparel exporters,” Fayat said.
