Machinery exports 6.9 billion in the first quarter

According to the machinery manufacturing industry consolidated data shared by the Machinery Exporters' Association (MAİB), Turkey's total machinery exports, including free zones, increased by 12.8% and reached 6.9 billion dollars at the end of the first quarter. Stating that machinery exports to Russia and Ukraine in the first quarter amounted to 676 million dollars with an increase of 440 million dollars compared to the same period of the previous year, Kutlu Karavelioğlu, Chairman of the Machinery Exporters' Association, said, “We do not only send more machinery to Russia in terms of quantity, but also increase our export income per KG compared to the previous year. We have increased it 1.5 times. On the other hand, it is clear that the developments in the EU and the USA will have negative effects on our exports to this country, which has been our focus for ten years.

At the end of the first quarter of the year, Turkey's machinery exports increased by 12.8% compared to the same period of the previous year and reached 6.9 billion dollars. In this period, when the largest machine exports were made to Germany with 847 million dollars, the sector reached 561 million dollars in the Russian market, where it increased by 230 percent. Noting that they achieved a 92% increase in the Ukrainian market, which was in the lower ranks in terms of export size in previous years, Machinery Exporters' Association President Kutlu Karavelioğlu stated that they expect Ukraine to enter the top 10 in a short time:

“In the first part of the year, with the effect of the slowing down investment environment due to the tight monetary policies in the EU and the USA, we anticipated that there would not be a significant increase in exports in our total machinery exports, but the intense demand from both Russia and Ukraine exceeded our forecasts. In the first quarter, our exports to these two countries increased by 440 million dollars compared to the same period of the previous year and amounted to 676 million dollars. We are not only sending more machinery to Russia in terms of quantity, we have also increased our export revenue per KG by 1.5 times compared to last year.”

“The Russian market, which has been our focus for ten years, is taking risks”

Karavelioğlu stated that the level reached in the sectoral relations with Russia, where they have been operating intensively since the annexation of Crimea as Turkey's Machinery Makers, relieved the machinery exporters, but that this period was also open to new developments.

“Due to the tension between NATO countries and Russia, the demand and pressure of the US for economic sanctions is increasing. In addition, European countries are trying to control more indirect exports to Russia. It is likely that the foreign trade control mechanisms initiated by Denmark, that is, the export of products to the Russian region through third countries, will become widespread throughout the EU. Increasing problems in the banking system and the ever-expanding list of banned machines are putting a strain on Russia and Turkey, which has become one of its most important suppliers. It is clear that this two-way development will have negative effects on our exports to this country, which has been our focus for ten years.”

Evaluating the foreign economic data, Karavelioğlu stated the following:

“While the recession expectations in Europe have been replaced by the possibility of growth, albeit limited, the fact that the region's imports have not slowed down so far shows that we are maintaining our export potential. A series of policies are being implemented feverishly in order to establish global technological leadership and dominance in the region. However, obstacles equipped with the Procurement Law and green-digital directives await us. For this reason, our exporting businesses have to take urgent measures in many areas, especially the Sustainability Rating, and not be late for norms and certificates compatible with EU markets.”

“The benefit of cheap imports does not reach the consumer”

Karavelioğlu pointed out that besides the current sustainability-oriented criteria, competitive price policy is one of the main factors affecting exports as the main determinant, and said, “No matter how good our technology level is, we have to give price offers that will convince our customers. While doing this, we have to maintain our balance sheet quality. However, the overvaluation of the Turkish Lira as a result of the stagnation in the exchange rate caused foreign currency revenues to be insufficient against domestic costs.

Emphasizing that as long as inflation stays ahead of the rate, imports will remain cheap, sectors with high added value will continue to pay the price of being domestic, Karavelioğlu said:

“This situation will inevitably bring about a return from production to trade. Manufacturers who have to maintain their scale are fed from the domestic market in order not to lose the foreign market; Complaints about double price practices also show this. While this vicious circle fuels inflation, it also creates a dumping issue. Importers, who provide large margins with the forced rising prices in the domestic market, take advantage of this opportunity, which obviously will not last long, by bringing in more goods. As a result, the effects of cheap imports are not reflected in the markets at the desired rate.”

“Increasing imports also hinders technology development”

Karavelioğlu stated that they were faced with increasing machine imports at a time when the adaptability of the SME-based industry, largely based on equity, brought about by its agile, flexible and stable structure, should highlight domestic manufacturers:

“We closed last year with 26 billion dollars of machinery exports and 38 billion dollars of machinery imports; both increased by as much as 11 percent and our deficit rose to $12 billion. This picture, which points to one of the most important items of the current account deficit, deteriorated with the increase of 23.4 percent in imports in the first 2 months of the year. Our production capabilities and techno-economic capacities are not endangered yet, but we should not forget that increasing imports are an obstacle to technology development. I believe that we will bring the import coverage ratio of exports, which fell below 70 percent in the machinery sector, to 80 percent again, with the steps that finally seem to allow the exchange rate to move."