Exporters cut year-end targets contrary to Turkish government plans

Trucks and shipping containers are pictured at Haydarpasa Port in Istanbul, Turkey, April 18, 2018. REUTERS/Yoruk Isik

ISTANBUL, August 4 (Reuters) – Turkish exporters revisit their year-end targets in a move that could derail the government’s economic plans as new orders fall amid signs of a global slowdown and inflationary pressures.

Turkey’s exports rose 19% year-on-year to $144.4 billion in the first seven months of 2022, but deteriorating global conditions, exacerbated by the war in Ukraine, held back for the rest of the year annual cause for concern.

The trade deficit widened 143% to $61.9 billion over the same period, mostly due to rising energy import costs, even as exports hit record highs.

The deteriorating export outlook threatens President Tayyip Erdogan’s economic plan, which aims to bring inflation down to nearly 80% in July by turning Turkey’s chronic current account deficit into a surplus.

Seref Fayat, head of the TOBB Garment and Apparel Council, said the garment industry’s year-end export growth target had been cut from 15% to barely growing.

“As we see a slowdown in new orders in the US and European markets in recent months, we have lowered our target,” he told Reuters, adding that he expects exports to remain flat year-on-year or will rise slightly.

Turkey has set an export target of US$250 billion for this year after hitting US$225 billion in 2021.

Automakers, which are among Turkey’s top exporters, are also revising their targets downwards. Tofas (TOASO.IS) cut its export target by more than 10%, while Ford Otosan (FROTO.IS) cut it from 350,000 to 360,000 to 330,000 to 340,000.

Ferdi Erdogan, vice chairman of Turkey’s Association of Building Materials Manufacturers (IMSAD), told Reuters that the euro’s weakness against the dollar posed another risk.

Trade Minister Mehmet Mus said Wednesday that Turkey’s export figures for the first seven months of this year would have been $7 billion higher had the euro not fallen against the dollar.

TOBB’s Fayat said the flagging euro has also hit the apparel sector, as the European Union is Turkey’s biggest export market, accounting for US$93 billion, or 41.3% of exports in 2021.

“The current level of the euro will result in a 7-8% drop in revenue and a 5% drop in profit for Turkey’s garment exporters,” Fayat said.

Reporting by Ceyda Caglayan; Edited by Ali Kucukgocmen and Christina Fincher

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