EU crisis, exchange rates hit key exports

ISTANBUL - Hürriyet Daily News

TİM President Büyükekşi (L) reveals exports data for June with D. Ali Tever, the president of the Çerkezköy Trade and Industry Chamber, in the northwest of the country.

Turkish exports declined last month as contracting European markets and adverse exchange rates mainly affected the performance of key automotive and textile sectors.

Turkey’s exports declined 5.5 percent year-on-year in June to $10.85 billion, the Turkish Exporters Association (TİM) revealed yesterday, while exports posted a year-on-year increase of 3.6 percent in June.

 “The biggest reason for exports decline in June was the shrinking demand in the automotive market. Automotive exports plunged by 22.3 percent. Also the ready-to-wear [retail] sector declined 12 percent as a result of shrinking demand. We are carefully following the declines in our flagship exports,” Economy Minister Zafer Çağlayan said yesterday, according to Anatolia news agency.

The automotive sector recorded the highest exports total in July with $1.47 billion, followed by the ready-to-wear sector with $1.4 billion.

The fall of the euro against the U.S. dollar had an adverse effect on the exports decline, Çağlayan said. “The adverse effect of the [euro/dollar] parity amounted to $550 million just in July,” he said.

Agricultural exports rose by 4.63 percent to reach $1.4 billion, and exports in mining sector increased 7.6 percent to $380.2 million, while overall industrial sector exports dropped 7.38 percent year-on-year to $9 billion in July. In the first seven months exports rose 10 percent to $85.2 billion. Turkey’s official exports target for this year is $148.5 billion.

The seven-month increase was still a success considering “the European Union is in a debt crisis and the euro has depreciated significantly against the dollar in year-on-year terms,” Özgür Altuğ, the chief economist at BCG Partners, said yesterday. “We continue to foresee that a similar export performance in the country will persist throughout the year,” he said.

Turkey will exceed the official growth target of 4 percent this year, said TİM President Mehmet Büyükekşi. “Exports will make up nearly 2.5 to 3 points of the estimated growth rate of 4.5 to 5 percent in 2012,” he said. But he cautioned about accelerating capital inflows since July 2011, which appreciated the lira and make Turkish goods more expensive in international markets. He urged the Central Bank to take measures to prevent the appreciation of the lira “in no time.”