With the euro falling against the U.S. dollar, some exporting industries in Turkiye are bearing the brunt as they pay for imports in dollars but collect export revenues mostly in euros.
This week, the euro fell below parity with the dollar, diving to its lowest level in 20 years.
The textile sector, whose export revenues amounted to $21.5 billion in the past year, pays for cotton it imports in the U.S. dollar, but some 70 percent of the industry’s exports go to Europe. Another sector affected by the euro-dollar parity is the fisheries sector, which sells most of its products to the continent.
The textile sector already had problems accessing financing, and now on top of that came the weakening of the euro, which erodes the revenues of the companies in the industry,said Burak Sertbaş, the chair of the Aegean Apparel Exporters’ Association (EHİB).
“Inputs used in the sector are paid in the dollar, but export revenues in euro. Prices of exported products also depressed due to the expectations regarding the global recession,” Sertbaş explained, warning that the industry’s exports may come to a halt and even decline in the second half of 2022.
The apparel and ready-wear clothing sector’s exports rose by 3 percent in terms of the euro from 118 million euros to 122 million euros in July, but in terms of the dollar, they fell by 11 percent from $140 million to $125 million, he said. “Probably this trend will continue in coming months.”
Some European nations import goods from Asia, making payments in the dollar, and amid the weakening of the euro against the dollar, some European importers may turn to Turkiye, he added. “If this happens, it can make up for some of our losses.”
The situation is no different in the aquaculture sector. Export revenues of the sector increased by 33.5 percent in terms of euro, but the rise was only 20 percent in terms of the dollar.
Companies operating in the industry pay for most of the inputs in the dollar, said Bedri Girit from the Aegean Fisheries and Animal Products Exporters’ Association.
Some seven of the industry’s top 10 export markets are in Europe, he noted, stressing that companies are losing money due to the weaker euro.
In July, Turkiye’s exports increased more than 13 percent to $18.6 billion, according to the latest data from the Trade Ministry. Among the top five export markets were Germany at $1.5 billion and Italy at $844 million.
Last month, exports to the European Union rose by 5.2 percent to $7.4 billion,accounting for nearly 40 percent of all exports.
Exports to the bloc increased from $51 billion in January-July last year to $60.7 billion in the same period of 2022, which corresponded to 42 percent of Turkiye’s total export revenues.