The fall in exports may damage the positive climate

Export figures for the first time in a long time dropped in November. This fall may affect the positive atmosphere that started forming recently because of the decline in world oil prices and because expectations of a shrinkage in the current account deficit. In the case that the fall in exports is limited to the month of November only, then it is assumed there will not be a serious problem. However, if it continues for a couple of months, it can create serious problems.

The decline in world oil prices for the past two months has positively affected, first and foremost Turkey and developing countries that are net energy importers. Turkey’s increasing fragility perception was restrained because of the fall in oil prices. Both because the current account deficit will shrink and also a fall will occur in the still high ranging inflation, the perception began improving. Russia’s economic troubles caused by low oil prices have increased the interest of foreign funds toward the Turkey market.  

One month before that, in October, according to official data, the foreign trade deficit shrunk and it was expected that this would reflect positively on current account figures. However, when seasonally adjusted, the small drop in exports in October transformed into a nominal decline in November. According to the calculations of Turkey Exporters’ Assembly (TİM), in November, exports went down to $12.8 billion with a fall of 6.4 percent. Despite this monthly fall, there is still an increase of 4.4 percent in exports for the first 11 months of the year. If this decline continues in exports, then this increase will also be curbed.

In official statements, it was told that the shrinkage experienced in the exports to EU countries was effective in the decline of exports in November. Despite that, exports to EU countries in the first 11 months still showed an overall increase, whereas in the January-November period, falls regarding important export markets such as Iraq, Russia, China, Libya, Iran and Ukraine were effective.

When viewed from this point, while a recovery in the EU has not started, while troubles are increasing, while falls in the important export markets in the region will continue associated with the tension in the region; it is apparent that a positive approach toward the future is obstructed.

Indirect effects

I had written before in this column that the continuation of the decline in world oil prices will positively affect Turkey’s economy, but to be able to reach a definite judgment, one needs to wait for the indirect effects. These indirect effects, if low prices continue, will become quite clear in the coming term.

For example, the economic situation in EU countries, which is one of the reasons of the decline in oil prices, has started negatively affecting Turkey’s exports. Russia’s difficulties because of oil prices, even though this country has lowered the natural gas price symbolically, had resulted in the decrease of exports to this country. Maybe Russian tourists visiting Turkey will be negatively affected from this in the next term.

Also, when there was an influx of short term capital inflow, this time foreign exchange rates went down and it should not be forgotten that this has a risk of increasing imports. This will cancel a portion of the improvement that is expected in current accounts.