Machine Exports Reached $8.9 Billion

According to the statement made by MAİB, machinery exports, which leveled off in the last quarter of last year and declined by 3.6% in the first four months of this year, increased by 5.4% in the last 12-month period, reaching $28.1 billion.

In the same 12-month comparison, the growth rate of machinery imports decreased to 12.9%, reaching $45.5 billion.

Due to the impact of sanctions, machinery exports to Russia decreased by nearly 20%, while in the first four months, exports to Saudi Arabia increased by 30.7%, Uzbekistan by 29.7%, and Egypt and Algeria by about 15%.

Germany, Russia, and the USA maintained their positions as the top three markets during this period, with a total export value approaching $2.5 billion.

MAİB Chairman Kutlu Karavelioğlu, whose views were included in the statement, noted that although no economic contraction is expected in Europe for the remainder of the year, the stagnation in the manufacturing and construction sectors, especially in Germany, does not seem to be short-lived.

Karavelioğlu highlighted that in Germany, where machinery exports have increased by nearly 6% annually over the past decade, there has been a negative trend for the first time in many years, albeit limited to 3.6%. He added, “The German economy, which shrank by about 0.3% last year, is also expected to fall behind 2022 figures this year. This trend is also valid on a global scale, and according to current world PMI statistics, data for consumption and intermediate goods are above 50, while those for capital goods are below 50.”

“Manufacturing PMI in Turkey Also Below 50 Points”

Karavelioğlu pointed out that Turkey’s manufacturing PMI was also below 50 points, indicating that while the manufacturing industry saw a production increase of 5.6% in the first quarter, machine and equipment production shrank by 4%. He noted that the tightening and rising costs of financing are naturally reflected in investment and business environments and production cost indices.

He stated, “In the machinery and equipment industry, the annual producer price increase is 10 points higher than the domestic producer price increase of 55.6%, standing at 65.5%. These data indicate a gradual deterioration in the production scales of our sector, which has preferred to progress with self-financing, and that it faces higher increases in personnel costs than other sectors.”

While the import advantage due to low exchange rates continues, Karavelioğlu noted that the machinery sector, being the sector with the highest domestic added value, is more affected by domestic costs. “When this is combined with the widening gap in the dollar/euro exchange rate due to the dollar’s appreciation globally, the pressure of financial factors on our competitiveness is becoming increasingly felt,” he said.

Karavelioğlu drew attention to the fact that quota applications on gold imports, a significant item in Turkey’s foreign trade deficit, had an impact of $6.5 billion in the first four months. He made the following assessments regarding imports of electrical and non-electrical machinery:

“Our Minister of Trade, Prof. Dr. Ömer Bolat, in his monthly foreign trade announcements, highlighted that the total exports of electrical and non-electrical machinery increased by 0.4% in the first four months to $13.1 billion, while imports decreased by 2% to $21.6 billion, drawing attention to the second-largest item in the current account deficit. The deficit from machinery, Turkey’s largest import item after energy, is much more significant and requires urgent measures compared to the gold imports we have limited with quotas.

As in many parts of the world, our public sector, being the largest buyer and user, must absolutely prefer domestic machinery in their purchases, aligning with the savings measures of our Ministry of Treasury and Finance. Beyond the purchase costs of imported machinery, their lifetime service needs such as maintenance and spare parts turn them into a permanent expense item and support our competitors’ technology development. We read the 8.7% decrease in machinery imports from China in the first three months of the year as the first signs of a general awareness beginning to form. We thank our Ministry of Trade, which closely monitors this issue.”

Karavelioğlu also stated that they have added a new study to their regular research on identifying the current issues of the manufacturing industry in Turkey and proposing solutions to responsible organizations:

“In our latest study titled ‘Measuring the Informal Economy for Machinery and Sub-Sectors,’ we determined the informality rate in our sector to be 23.68%. This rate was 24.93% in our 2015 research. Despite the rapid increase in the number of businesses and migrants and the impact of the pandemic on increasing informality rates, we see an improvement of about 5% on average over the last 7 years.”

source: prepared by Melisa Beğiç

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