According to consolidated data from the machinery manufacturing industry, by the end of the first 10 months of this year, Turkey’s total machinery exports, including free zones, decreased by 4.3% in quantity to 3.1 million tons. In terms of value, exports remained stable at $23.3 billion, the same level as the previous year. In October, machinery exports exceeded $2.5 billion, marking a 4.3% increase compared to the previous month, with an average export price of $7.5 per kilogram. The largest machinery export categories in the 10-month period were domestic and industrial cooling machines, followed by internal combustion engines and their parts, and construction and mining machinery. Pumps, compressors, tractors, agricultural, and forestry ma chinery were also among the sectors that exceeded $1 billion in exports.
“Walls Are Rising Again in the World”
Kutlu Karavelioğlu, President of the Machinery Exporters’ Association, pointed out that with the conclusion of election uncertainties in the U.S., the global economy is now facing the potential consequences of Donald Trump’s possible return to the presidency. Karavelioğlu assessed the possible impacts of Trump’s policies on global exports:
“The Trump administration’s promises to impose high tariffs on imports are likely to ignite a new wave of protectionism, which will inevitably lead to a noticeable contraction in global trade. Rising walls could weaken global growth and, with additional tariffs targeting producers rather than products, disrupt ongoing efforts to reduce inflation. For sectors like ours, where the primary market is Europe, exports are mainly in euros, and imports are in dollars, the strengthening of the dollar will negatively impact profitability and competitiveness. Our recent growth in machine exports to the U.S. was the result of efforts to mitigate currency risks. We believe that new disruptions in supply chains could create opportunities for Turkey, especially in the U.S. market where our cooperation is growing. On the other hand, countries whose trade relations with the U.S. are being restricted will likely develop more aggressive strategies, including rerouting trade, which will not be in favor of those who are hesitant to build their own walls.”
“Developed Countries Are Determined to Protect Their Manufacturing Sectors”
Karavelioğlu also noted that the reasons behind the protectionist demands from strong industrial sectors in the U.S. and Germany are not as widely discussed as their consequences:
“The fact that international institutions and organizations have to update their economic forecasts every two to three months is a sign that traditional methods are not sufficient to understand and name the ongoing changes. The difficulties and challenges in industrial transformation processes are much deeper. A 2% decline in the global machinery market turnover is causing major problems in developed countries dominated by traditional industrial sectors. Data such as the PMI index in Germany falling to 40.6 in September raise concerns about the shift of production to countries with lower costs. The growing trend in U.S. voter behavior signals that developed countries are determined to protect their manufacturing sectors, such as machinery, automotive, and defense industries. To maintain our competitive strength, which has helped us navigate these polarizations, we must focus more than ever on scaling production and diversifying technological capabilities in niche areas. We need to make public investments, innovation, and sustainability support more functional in our key sectors.”
“China’s Objection to Discriminatory Practices Is Not Justified”
Karavelioğlu discussed Turkey’s growing trade deficit with China, which currently stands at $16 billion annually, with 75% of this deficit originating from Chinese imports:
“We find China’s objection to a more balanced trade relationship, which is being emphasized by our ministries, to be unreasonable. For years, we have had a one-sided relationship with China, where we have hardly sold any goods. We have criticized this situation, saying, ‘If they want it so badly, let’s sign a Free Trade Agreement.’ Despite a 8.6% decrease in machinery imports from China in the first nine months of the year, our imports still reached $8.2 billion. We hope to see more significant improvements in this relationship, as we currently sell only $150 million worth of machinery to China, while it imports $20 billion worth of machinery annually from Germany and over $220 billion from around the world.”
“Decline in Machinery Exports Compensated by Prices”
Karavelioğlu concluded by highlighting the significance of the Trade Ministry’s emphasis on net goods and services exports contributing half of the second-quarter growth:
“The observation in the Ministry’s monthly report that external demand, which is the main determinant of exports, remains below historical averages is accurate. Demand, investment, and production have weakened in almost all domestic markets, and capacity utilization rates have declined. However, this has led to a decrease in overall export prices, while the increase in value is mainly driven by a larger increase in quantity. In the machinery sector, however, the decrease in quantity has been compensated by higher unit export prices. This price adjustment, resulting from rising domestic production costs, will inevitably reach a limit. If costs become unsustainable, there could be job losses. In our sector, where employment increased by 40% between 2019 and 2023, we have seen a stagnation in employment growth in the last 12 months, with even a slight decrease of 1%. At the same time, machinery production, which increased by 72% over the same period, has dropped by around 8% this year. To maintain our competitive strength, this trend must be reversed quickly.”