Machine Exports Reach $4.4 Billion in the First 2 Months

According to data compiled from the Machinery Exporters’ Association (MAIB) by an AA correspondent, Turkey’s total machine exports, including free zones, amounted to $4.4 billion at the end of the first 2 months of the year.

Despite observing the base effect of the high increase experienced in the first 2 months of last year at the level of 20%, there was no decline during this period. Exports of construction and mining machinery, textile and garment machinery, as well as food industry machinery, drew attention with increases ranging from 22% to 29% in quantity and value.

According to the data, there were decreases of up to 28% in quantity and 25% in value in the exports of electric motors and generators, as well as machine tools.

Due to sanctions, machine exports to Russia, which continued to decline, decreased by about $130 million by the end of February. The share of Germany and the United States, with exports reaching $950 million in the first 2 months, including free zones, increased to 21.5% of the total machine exports.

“Russian sanctions make our competitors invisible” MAIB President Kutlu Karavelioğlu, in his statement to AA regarding export figures and developments in the sector, pointed out the effects of sanctions imposed on Russia, which is a strong market where machine manufacturers can alleviate their commercial losses in times when investments are slowing down worldwide, on global machine trade. He said:

“The machine sector has been heavily affected recently by the restrictions on dual-use products, which are presumed to be used in Russia’s defense needs. This process, which has turned into an unnamed embargo, has been increasingly uncertain in the restricted products list subject to sanctions, leading to ambiguity. While placing orders and receiving advances, a machine not included in this vague list may end up on this list after delivery, leaving our money in Russia, causing difficulties for our sector for some time now.

The pressure applied through the banking system has reduced our machine exports to Russia by as much as 37% in the first 2 months; our losses could exceed $1 billion by the end of the year. Aware of the difficulties of reclaiming this large market that has been left to China, the West, which knows the challenges, continues to seek ways to send their machines without risking their businesses. This collusive situation is causing significant deviations in foreign trade data of machine-producing countries rather than trade in machines. We attribute the hesitation of some European countries, which benefit from the trade of machines rather than their manufacture, to the shifts in trade routes.”

“While our customers are slowing down, our competitors are accelerating” Karavelioğlu stated that the first signs of financial recovery were emerging in the global tightening environment.

According to the World Trade Organization data, while global merchandise trade declined by about 5% in 2023, machine and equipment production in the EU decreased by 1.4% in terms of constant prices, taking into account the base effect. Karavelioğlu noted that in an environment where financing costs, polarization, and regional conflicts are so high, it is natural for risk appetite to decrease in developed countries. He said:

“In fact, this decline had already begun for Europe before the pandemic, and the weaknesses of the region had become invisible thanks to urgent measures to disrupt supply chains. However, the machine manufacturing industries of each country are not equally affected by this conjuncture. While the PMI data, which fell to 46.5% in the Eurozone last month, is at its peak in countries such as India, Brazil, and Mexico, which have attracted significant machine investments in recent years. In short, while our main customers are slowing down, our competitors in developing countries are speeding up. The fact that our machine exports to Germany and the USA continue to increase shows not only our technological development power but also the strength of our ties in the West in the fiercely competitive race among machine-exporting countries.”

“The intensity of investments should not lead to unfair competition” Kutlu Karavelioğlu pointed out that the strategic approach to the machine sector, which is at the center of the redistribution of production and twin transformation, continues in the 12th Development Plan.

Karavelioğlu reminded that the total machine and equipment investments increased by 70% in Turkey, reaching $168 billion annually, between 2019 and 2023, which saw a total increase of 12% in the world. He said:

“With this extraordinary performance, Turkey’s share in the world machine equipment investments increased to 3% in 2023. Since a significant portion of these investments is made by our machine manufacturers, while machine production increased by 12% in the world in terms of quantity during this difficult period dominated by crises, it increased by 65% in our country. The contribution of incentive documents, which exceeded a total fixed investment amount of 5 trillion liras in the same 4 years, cannot be denied. However, despite all its benefits, we must also see that the incentive legislation can become an unfair competitive factor by rendering defense measures developed against dumped goods in our import regime ineffective.”

“Our entire general manufacturing industry remains without confidence in the local” MAIB President Karavelioğlu emphasized the positive impact of the technological polarization in machines, which constitutes the second-largest item in world trade after oil, on Turkey’s exports but underlined that it did not benefit its imports.

Karavelioğlu said that while they were forming a good alternative among Western competitors with price, quality, and technological diversity, in this environment, industrialists imported $12 billion worth of machines from China, from which they could not sell machines, and increased the foreign trade deficit to $17 billion. He said:

“After the first 4 months of 2023, although not announced, the share of domestic ones among the machines allowed to be purchased with incentives remained at 89% in energy investments, 67% in services, 71% in mining, and 96% in agriculture, while it remained at 39.6% in the general manufacturing industry. Everyone should make the self-criticism of this situation. Within the scope of the 1.25 trillion liras of investment incentive certificates issued in 2023, the share of machines to be imported duty-free and VAT-free amounts to $18 billion. Our production declined for the first time and significantly, by about 5.5%, since the pandemic, with imports of $3.3 billion worth of machines in January. While our main market is contracting and we are losing ground in Russia, the continuation of the increase in imports is a threat that could interrupt our outstanding performance over the past 4 years.”

source: prepared by Melisa Beğiç

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