Turkey's Machinery Exports 12,5 Billion Dollars in the First Half of the Year

Turkey's Machinery Exports Billion Dollars in the First Half of the Year
Turkey's Machinery Exports 12,5 Billion Dollars in the First Half of the Year

Turkey's machinery exports increased by 7,9 percent in the half of the year compared to the same period of the previous year and reached 12,5 billion dollars. Kutlu Karavelioğlu, Chairman of the Machinery Exporters' Association, pointed out the importance of energy supply for countries, stating that the businesses in this region have started to become more fragile with the effects of the pandemic and the Ukraine crisis:

“Germany and Italy, where we experienced a decrease in machinery exports in June, are also the EU countries that have the most problems in energy supply and security. Germany, which has a monthly foreign trade deficit for the first time in many years, is heavily affected by the sanctions against Russia. In our case, on the contrary, machinery exports to Russia are running from record to record.”

Pointing out that energy cuts may come to the fore in the German industry due to the interruption of natural gas flow, Karavelioğlu said:

“With the tightening policy of the EU after the USA, machinery and equipment investments in the West may slow down significantly. The possibility of recession in our main markets makes us think. On the other hand, we still maintain our hope that production will become visible with the change of geography and that the increasing interest with our strong and reliable stance in the pandemic process will peak with sustainability investments. If our export growth rate can hold above 10 percent, we will be able to close the year close to our target of 27 billion dollars this year.

This need will be reflected in Turkey as an order with the effect of the shift in the supply chains. But the critical factor in the new situation is the export of machines with higher technology level. Even though the fear of a recession in the West may lead to the suspension of many investments, legislation developed in line with the goals of the green agreement is on its way. The revision of production lines with qualified machines has to continue somehow. Our machinery and IT industries have to work much more closely, and our businesses have to continuously expand their digital and green product export product groups. Another meaning of this is that our need for energy efficiency and resource diversity in our country will increase rapidly.” said.

Karavelioğlu stated that the energy transformation poses a serious threat to production scales in all countries, and that it can deeply affect the activity structure of the general manufacturing industry, starting with the costs of raw materials and auxiliary materials, and said:

“Although the fear of recession has a calming effect on the speculative environment created by supply-demand imbalance, it does not seem like the obligation to work with stocks fueled by global political uncertainties will disappear. Our machinery sector, whose production has increased by 9 percent and 32 percent in the last two years in a row, is now much more competitive but needs much more working capital. In order to maintain the enlarged scales, we have to do more domestic business during periods when foreign markets slow down. The extraordinary increases of 21 percent and 24 percent in Turkey's machinery and equipment investments in the last two years are difficult to replicate, but since we follow an export-oriented growth policy, we must also find ways to maintain production investments despite anti-inflationary measures. The fact that general manufacturing industry investments are generally financed by long-term foreign and even foreign resources will affect the investment appetite very quickly. That being the case, it shouldn't be too difficult to develop methods of investing our own money in our own machines.”

Making evaluations about the equalization of the dollar and euro parity, Karavelioğlu emphasized the high domestic added value ratio of machinery manufacturers and said:

“The machinery industry makes 70 percent of its exports in Euros and 70 percent of its imports in dollars. Earning euros and spending dollars is of course unfavorable as the parity weakens, and if it continues, all our sectors will need to revise their annual export targets, which they set on dollar basis. Turkey is one of the countries with the highest domestic added value in machinery exports. According to OECD data, the domestic value added rate is 76 percent, at the same level as Germany. In other words, we need TL more than dollars. For this reason, it is important for our sector how many TL 1 euro is, rather than how many dollars it is. We need stable export growth and we believe that the natural level of exchange rates against TL can be a balancing factor in this period when the parity is almost equal and recession concerns are at its peak.

High energy and commodity prices had a great impact on this deficit, but the increase in our industry's machinery imports also had a negative impact. The money we have paid to foreign machines in the last 12 months has reached 35 billion dollars. Turkey paid 150 million dollars more every month to machines coming from Far East countries this year. If machinery imports from this region continue at the same pace, the amount we will pay to Eastern countries at the end of the year will exceed 10 billion dollars. Every year, Turkey spends the money NASA spent on building the James Webb Space Telescope for Far East machines. We believe that the public, machine users and machine manufacturers must devise a common strategy on this issue, which we find risky in terms of foreign exchange balance, sustainability and lifetime costs.”

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