According to the machinery manufacturing industry consolidated data, at the end of the first 4 months of the year, Turkey’s total machinery exports, including free zones, increased by 7.4 percent and reached 9.2 billion dollars. The exports of the sector in April, which had a missing day due to the public holiday this year, decreased by 7.0 percent compared to the same month of 2022. Machinery manufacturers, whose exports to Russia have tripled and their exports to Ukraine have doubled in a 4-month period, exported a total of 1.8 billion dollars to Germany and the USA. Kutlu Karavelioğlu, Chairman of the Machinery Exporters’ Association, stated that these results obtained in the first third of the year coincide with the calculations at the beginning of the year, and said: “No one has any doubt that the problems caused by climate change, financial crises and epidemics cannot be solved with traditional risk analysis and methods. The Systemic Risks category put forward by the OECD to express the global elements that threaten the critical infrastructures of societies is of interest to us as well, but instead of thinking about these concepts, our exporters; he is currently trying to solve his short-term, even daily problems. In this period of slowdown in the global industry and a noticeable decrease in machinery and equipment investments, we are busy with the continuously increasing machinery demand of Russia and Ukraine. We look forward to the times when we will leave behind the uncertainties that have increased with the election agenda.”
“Exporters should be freed from the burden of inflation”
Even though the orders from Russia and Ukraine neutralized the effects of the tightening process in the world for Turkey, Karavelioğlu warned that the slowdown in world machinery foreign trade would continue until the end of the third quarter and added: On the contrary, the rise in interest rates up to 8 percent in dollar terms in some regions created a harsh brake effect on trade in consumption, durable goods and investment goods. In April, our machinery exports to Germany, Italy and France contracted by more than 12 percent on a monthly basis. Developed countries, which spent the first quarter with small growth, anticipate that their growth will remain at zero in the next 6 months, and many countries predict that machinery manufacturing and foreign trade will shrink. However, we will not be included in this generalization, with the contribution of our access to different markets as well as the relations we have established with Russian and Ukrainian industrialists. With our increasingly diversified product and technology level and our ability to be a reliable supplier in times of crisis, we will close this year much more efficiently than our competitors. As long as our techno-economic capacities are not damaged by the long-term valuable TL policy, which makes exports difficult and imports easier.”
“All the weight of inflation is on the exporter”
Estimating that the second half of this year will be the scene of efforts to end the policy, which has clearly become unsustainable and the entire weight of inflation has been put on exporters due to the horizontal course in exchange rates, Karavelioğlu stated: “In April, Turkey’s total exports decreased by 20 percent compared to March. rather than machine and other technology-oriented fields; The sectors that need extra labor and working days, that is, with relatively lower added value, were affected. We can already say that a reasonable correction in exchange rates at a rate compatible with the economic balances will be a development that will relieve all our exporters during a possible tightening in the domestic market.”
“Credit opportunities offered by European machinery manufacturers fuel import addiction”
Pointing out that the production and competitiveness of the manufacturing industry, which it has gained by taking risks and making investments at 4 times the world average in the last 3 years, which started with the pandemic and continued with the crises, is under the pressure of the importers who make huge profits at the point reached, Karavelioğlu mentioned that this situation is also evident from the rapidly increasing foreign trade deficit. “Turkey’s machinery imports have increased by 16.4% in the last 12 months, reaching a historic level of 40.2 billion dollars. Now, we can say that the average foreign trade deficit of the machinery sector is over 1 billion dollars per month. This gap opened especially in the last period when the exchange rates were flat and reached 1.6 billion dollars in March when the average dollar rate was below 19 TL. The fact that this trend is not limited to cheap Asian countries and that our industrialists’ interest in Western goods, which are normally expensive for most businesses, has increased, especially in the last 6 months, shows that there is a problem in domestic prices and that manufacturers are pursuing long-term credit opportunities that carry currency risk despite everything. Although we have a balanced and developing trade with Europe, where we make 63 percent of our machinery exports and 54 percent of our imports, long-term engagements create a situation against our country by establishing dependency relations in many areas from maintenance and service services to spare parts. In the second half of the year, we have high expectations for the domestic market to rebalance.”
A professional writer by day, a tech-nerd by night, with a love for all things money.