The state of exports is not very encouraging

In recent columns I have tried to understand the causes of the low growth regime prevailing over the last three years. In my last column, I discussed the pitiful state of private consumption.

Today I would like to focus on exports. The “balanced growth” regime, installed in 2012, foresaw sizable increases in exports in such a way that net exports would make a positive contribution to economic growth.

This target has not yet been achieved in a satisfactor

In recent columns I have tried to understand the causes of the low growth regime prevailing over the last three years. In my last column, I discussed the pitiful state of private consumption.

Today I would like to focus on exports. The balanced growth regime, installed in 2012, foresaw sizable increases in exports in such a way that net exports would make a positive contribution to economic growth.

This target has not yet been achieved in a satisfactory manner In 2014, exports grew only by 38 percent. This year export performance might be even weaker Let me remind my readers that the average export growth rate was 12.

5 in the 1980-2014 period.

The BahccedileIehir University Centre for Economic and Social Research (BETAM) published a research brief on Friday that summarizes the development in Turkish exports and its problems well.

BETAM’s research describes the evolution of exports in recent years at a national level. The main property of this evolution is that increases and decreases at the national level have been very sizeable.

When the European Union economy entered a recession with the global economic crisis, Turkish exports to the European market suffered, naturally. At the same time, fortunately, exports boomed in other neighboring markets, particularly in the Middle East, allowing Turkey to avoid a decrease in its exports.

The market share of the European market reached 55 percent in 2007. Within five years, this share decreased to 39 percent.

In the same period, the share of exports in the Middle East and North Africa went up to 29 percent from 17 percent.

After 2012, while the EU economy started to grow again, certainly very slightly and unequally on a country-to-country basis, our neighbors fell into extreme political crisis provoking armed confrontations.

During the last two years, exports to the EU increased from $59 billion to $68 billion, growing by 15 percent the growth of exports in 2014 being close to 9 percent. Thanks to this rather robust growth, the share of EU markets started to increase and reached 43 percent in 2014.

Germany, the first market for Turkish exports, was the country to lead this comeback. Out of 9 billion extra exports, 2 billion have been realized in the German market.

The other best performances were realized in Great Britain, Spain and Italy.

The change in exports to markets in the north, east and south was dramatically opposite.

I think I do not need to remind you what happened in 2014 between Russia and Ukraine on one side, and between Russia and the West on the other As for Turkish exports, they have been adversely affected by the turmoil. Until 2014, exports to our northern neighbors had regularly increased.

However, last year exports decreased by $1 billion to Russia (-14 percent), and by $460 million to Ukraine (-21 percent).

The decrease of exports to Iraq and Libya has also been quite dramati

In 2013, exports to these countries reached $12 billion and $2.8 billion, respectively.

Last year the exports to Iraq decreased by $1 billion and to Libya by $700 million. The surprise was in Syria: Exports to this country had reached their lowest level in 2012 at $500 million.

Since then, they have been increasing, and reached $1.8 billion last year Who buys the Turkish goods is another issue.

Let’s note also that despite the existing political confrontation, exports to Israel are still increasing: They reached almost $3 billion last year To summarize, total exports to the Middle East and to North Africa have decreased in the last two years from $52 billion to $45 billion.

Given the political and economic conditions that are actually prevailing, Turkish exports in 2015 do not appear encouraging.

Admittedly, the global economic recovery in the EU might be a little stronger than last year, so the demand for Turkish goods should normally increase. Nevertheless, the huge depreciation of the euro against the US dollar in the last few months has caused a slight appreciation of the Turkish lira against the euro.

This loss of competitiveness is an obstacle for exports. On the other hand, one expects a sizable contraction of the Russian economy in 2015.

Compared to January 2014, exports to Russia had already decreased by 31 percent this January. Civil wars continue to ravage the Middle East and Libya, which will probably cause further decreases in exports.

To sum up, we cannot expect a sizable contribution of exports to economic growth this year I hope I am mistaken.

SOURCE: TODAY’S ZAMAN