Imports continuing to outstrip exports in foreign trade balance
MUSTAFA SÖNMEZ - firstname.lastname@example.org
DHA PhotoTurkey further integrated with the world economy through foreign trade after November 2002 when the Justice and Development Party (AKP) came to power. In 2003, with $47 billion in exports and $69 billion in imports, Turkey’s foreign trade volume was $116 billion, amounting to 38 percent of that year’s national income.
With the rapidly increasing foreign trade volume of recent years, integration has strengthened, but the foreign trade deficit has also grown. The year 2013 ended with $152 billion in exports and $251 billion in imports. This means a foreign trade volume of $403 billion, and if the year’s national income is calculated at $800 billion, it would mean foreign trade equals half of the national income. In other words, from 2003 to 2013, the rate of foreign trade to national income has risen from 38 percent to 50 percent. This is actually a very rapid integration.
However, all those years that have passed have also revealed that despite integration through foreign trade increases, the foreign trade deficit has not been reduced. The foreign trade deficit of $22 billion in 2003 was 7.2 percent of the national income. In 2013, the foreign trade deficit, which is nearing $100 billion, will be no less than 13 percent of Turkey’s 2013 national income. In other words, as the integration increased, the foreign trade deficit has multiplied; correspondingly, the current account deficit has continued to increase.
Ultimately, the problems stem from the fact that there are only nine exporting sectors to the 17 that are net importers. The most important sectors that make Turkey a net importing country are energy, chemicals and basic metals, predominantly iron and steel.
Turkey is extremely foreign-dependent in energy. While crude oil and natural gas imports reached $36 billion in 2013, together with coke, refined oil products, and lignite, these imports had reached $55 billion and constituted 22 percent of the total $251 billion in imports. While these sectors exported $8 billion, their net imports totaled $47 billion. If we take the average of the five years between 2009 and 2013, then the average is around $42.5 billion. The bill is rising with each passing day.
Chemicals and the basic metals industry of predominantly iron and steel constitute the two other net import sectors. In metal and chemicals, which contain a series of items from medicine to chemical raw materials used in several sectors, there were only $25 billion in exports in 2013, despite $69 billion in imports. These two sectors have conducted net imports of $44 billion.
The average imports of these two sectors in the period between 2009 and 2013 have been $54 billion; their exports, on the other hand, have reached $25 billion. Thus, their average net deficit over five years totaled $29 billion annually. Among them, the iron and steel industry stands out as an intensely energy-consuming sector. Thus, its net importing feature is more prominent.
In 2013, while the demand for medical and optical instruments and computer products resulted in a net import of nearly $8 billion, the sector encompassing machinery and equipment, as well as the communication and apparatus sector including TV and cell phones, conducted $6 billion in net imports. In previous years, this section of imports was much lower.
Another net importing sector is agriculture and animal husbandry. Turkey was not able to feed itself between 2009 and 2013, meaning it lost an average of $2 billion a year in net foreign currency.
While the numbers for the automotive sector were close, Turkey still displayed slight losses over the period, importing $19.4 billion worth of goods in 2013, versus $18.2 in exports. Its net average foreign currency loss between 2009 and 2013 was $700 million.
The nine sectors that made net exports sold $65 billion worth of goods abroad, while importing just $30 billion, thus making a net $35 billion in foreign currency.
At the top of the sectors that have gained foreign currency are the ready-wear apparel, textile and food sectors. The ready-wear apparel sector earned a net of $10 billion in foreign currency in 2013, while the textile sector neared $9 billion in earning, versus around $5.2 billion for food.
Other sectors that have earned foreign currency include furniture, ceramics-cement, metal goods and rubber and plastic products.
In 2014 when the economy is expected to grow only around 1 or 2 percent, it is hoped that there will be a drop in imports and a relative rise in exports in connection with the hike in the foreign exchange rate.
It may be expected that the automotive sector may also join the net exporters in the event that imports decrease in the sector and foreign orders increase. If the same is also experienced in appliances and other durable consumer products, then Turkey’s foreign trade deficit, which has reached $100 billion, may continue to drop more.
As such, the current account deficit may also decrease a little in connection with the low growth rate, dropping to as much as 4 or 5 percent of the national income.