According to the consolidated data of the machinery manufacturing industry shared by the Machinery Exporters’ Association (MAİB), Turkey’s total machinery exports, including free zones, broke a record by increasing by 0.3 percent to 28.3 billion dollars in 2024. Noting that possible developments such as the reconstruction of Syria, Ukraine and Palestine with the support of international financial programs and the opening of restricted Russian and Israeli markets create strong expectations for 2025 and beyond, Machinery Exporters’ Association President Kutlu Karavelioğlu said, “When we also take into account the efforts of Europe, whose NATO guarantee has decreased, to increase its defense industry capacity, new opportunities seem to have emerged on the horizon where we will find the opportunity to test our competitiveness, which has strengthened greatly since the pandemic, despite everything.”
According to the consolidated data of the machinery manufacturing industry, Turkey’s total machinery exports, including free zones, increased by 0.3 percent compared to the previous year and amounted to 28.3 billion dollars in 2024. The average export prices of machinery manufacturers, whose exports decreased by 4.7 percent in tonnage, increased by 4.2 percent per KG. The sub-branches that were exported the most were domestic and industrial refrigeration machines and internal combustion engines and parts, followed by construction and mining machines and washing and drying machines. The sub-branch with the highest proportional increase in exports was turbines, turbojets and hydraulic cylinders, while the biggest decrease was observed in electric motors and generators. Exports to Germany, the largest export market, decreased by 5.4 percent to 3 billion dollars, while the deficit was covered by the US market, where machinery exports increased by 5.6 percent to 1.8 billion dollars. Although machinery exports to Russia decreased by 400 million dollars due to sanctions, the sector exported 100 million dollars more in total compared to the previous year.
“Global machinery and equipment investments are behind 2022”
Sharing his expectations regarding global machinery trade and Turkey’s exports, Kutlu Karavelioğlu, Chairman of the Machinery Exporters’ Association, made the following assessments, with the prediction that this will be a year in which macro policy proposals will come to the fore against the uncertain environment inherited from the past:
“World machinery and equipment exports, which shrank by 1 percent the previous year, closed 2024 with a 2 percent increase and a limited recovery provided by the increase in machinery prices. The IMF’s estimate that the world economy will grow by 2.8 percent in 2025, falling short of its potential, indicates that machinery and equipment investments will not be able to rise to the level of 5.5 trillion dollars in 2022 this year and that losses in production will not be compensated.
It is also stated by considerable sources that additional customs duties that Trump may impose to fulfill his election promises could shrink global trade by 8-10 percent. The result of a protectionist craze that could spread to the entire world would be that investments would remain at a low level due to rising inflation and a high interest rate environment. Critical days await our sector, which overcame the difficulties in Europe with the vitality in the US in 2024.”
“The exit from green funds is a signal flare of polarization”
Karavelioğlu, who stated that they expect the contraction in Europe, where real investments decreased by 3.9 percent and closed the year with a 4.8 percent decrease in turnover in the machinery sector, to continue according to the ORGALIM report, said the following:
“In Germany, where its competitiveness has decreased in the industrial sectors where it has traditionally been strong, and it has started to lose its trained workforce to the service sectors due to the deterioration in the production infrastructure, the process referred to as ‘deindustrialization’ has many social side effects. In Europe, where political uncertainties are added to the rising concerns, although the situation in relatively smaller economies is manageable, confidence in the German economy is being shaken. Europe, where SMEs are slowly withdrawing from the production area and large-scale manufacturers are lagging behind technologically, is looking for ways to overcome the stagnation in its domestic market and create advantages in exports through new FTAs. It is becoming increasingly difficult for them to cope with the strategic attacks of China, which has put all kinds of aggressive measures on its agenda, including devaluation, against Trump policies and aims to increase the share of industry in GNP to 35 percent again. At this very stage, the withdrawal of US banks from global green funds one by one can be read as a new manifestation of the EU-US polarization that is gradually taking on flesh and blood. The EU is experiencing difficulties in the Green Deal, which it clings to tightly in order to protect its competitiveness but receives reactions from its own industry at every stage. We consider the question of which countries can cope with the brand new risks that Europe, which will be forced to turn inward and even close down, will pose to world trade and production, as important in determining our strategies. Despite all the current uncertainties, we should not leave any process or investment we have undertaken to increase our wealth in technology and quality classes without results.”
Pointing out that possible developments such as the reconstruction of Syria, Ukraine and Palestine with the support of international financial programs and the opening of the restricted Russian and Israeli markets create strong expectations for 2025 and beyond, Karavelioğlu stated the following:
“It is clear that the eagerly awaited ceasefire or peace agreements that are expected to end all sanctions will take time. This year, our income loss in Russia, where the contraction in our exports was 17.1 percent, reached 400 million dollars. The trade ban with Israel also had a negative impact of 250 million dollars on our machinery exports. When we consider the efforts of Europe, whose NATO
guarantee has decreased, to increase its defense industry capacity, new opportunities seem to have emerged on the horizon where we will have the opportunity to test our competitiveness, which has strengthened greatly since the pandemic, despite everything.”
“The shrinking market multiplies the impact power of imports”
Karavelioğlu, who stated that the Industrial PMI has been in the negative region for the last 4 months in the machinery sector and that production in the machinery industry decreased by 8.3 percent in the January-October period according to TÜİK, stated that they are more optimistic for 2025 and said the following:
“Although commercial credit growth is still below targets, we understand that there will be a relaxation depending on the course of inflation and that small and medium-sized enterprises will be tried to be relieved with practices such as the Employment Protection Program and new financing opportunities. Positive news such as the decrease in interest costs in export and foreign exchange earning services rediscount credits, etc., erase the traces of pessimism in the last quarter of 2024. Nevertheless, in a period where the deterioration in manufacturing activities and the slowdown in the global machinery order index continue, it is certain that it will not be easy to turn machinery and equipment investments, which started to shrink after a 19-quarter break last year, into positive.”
Karavelioğlu, who stated that consumption rather than production was effective in the inflation realizations exceeding the targets in 2024, stated the following:
“We have left behind a year in which the cost pressure created by the valuable TL application on engineering-intensive and domestic value-added sectors such as machinery eroded competitiveness. Learning that TL will continue to gain value in the new year may have pleased importers whose impact power has increased in the shrinking market. In addition, as a sector that makes 47 percent of its exports in euros, the change in parity may also pull down our exports in dollar terms. In a process where hot wars are giving way to trade wars, Trump’s moves, which include business people in his executive cadres, may be inspiring. We believe that we will not be defenseless in the new year, when the DXY index will develop in favor of the dollar and imports will become easier.”