According to the consolidated data of the machinery manufacturing industry shared by the Machinery Exporters’ Association (MAIB), Turkey’s total machinery exports, including free zones, in the first month of 2025 was 2.1 billion dollars. Kutlu Karavelioğlu, Chairman of the Machinery Exporters’ Association, who shared the prediction that although an increase was achieved in the global goods trade volume this year, where both developed and developing countries are expected to grow below average, it will fall behind the 2000-2019 average of 3.5%, said, “PMI data on machinery orders indicate that the contraction in investments will continue both in our country and in the world. The increasingly diverse and increasing commercial and political interventions of the new US administration and the countermeasures being developed by the addressee countries are dragging even planned and ongoing investments into a deadlock.”
According to the consolidated data of the machinery manufacturing industry, the annualized exports of the machinery sector, which exported a total of 2.1 billion dollars including free zones in January, were 28.3 billion dollars. Machinery manufacturers, whose exports decreased by 5.7% in quantity compared to the same period last year in January, kept the decline in value at 2.4% due to the ongoing increase in export prices. In this period, where export unit prices per KG increased by 2.7% to $7.4, sub-sectors started the year stagnant. Although double-digit increases of 19% were achieved in food industry machinery, 16% in load lifting, transport and stacking machinery, and 15% in textile and apparel machinery, 13 sub-sectors remained negative. While the top five countries were Germany, the USA, Italy, the United Kingdom and Russia, the decline in Germany continued to deepen with 8%. Russia, where exports have become increasingly difficult due to the expansion of the sanctions list and the continuation of payment problems, fell from 2nd to 5th in the market rankings with a 31.8% decrease.
“We are in a period where we can make a leap with engineering-intensive sectors”
Expressing that foreign demand, which is of critical importance in terms of export data, is below historical averages, Kutlu Karavelioğlu, Chairman of the Machinery Exporters’ Association, stated that the global goods trade volume has not yet reached the desired levels and made the following assessments:
“It is estimated that Turkey’s machinery exports, although decreasing in terms of quantity, could achieve a limited increase of 0.3% with increasing export prices in 2024, and that global machinery and equipment investments could only return to the 2022 level by increasing by 2.8% due to the base effect. In the new year, when both developed and developing countries are expected to grow below averages, it is predicted that even if an increase is achieved in the global goods trade volume, it will fall behind the 2000-2019 average of 3.5%. PMI data on machinery orders indicate that the contraction in investments will continue both in our country and in the world. The increasingly diverse and increasingly political and commercial interventions of the new US administration and the countermeasures being developed by the countries in question are putting even planned and ongoing investments in a bind; all feasibility studies, starting with their locations, are being reviewed. While investments are being postponed in our country due to the high interest rate environment and idle capacities, the machinery and equipment industry production continues to decline. The machinery and equipment industry was one of the three sectors whose production decreased the most in December with a 5.9% decline. However, our sector has the ability to make a bigger leap forward than in past crises as a result of the capacity and technology increase it has achieved in the last 5 years. It would be a correct approach to protect and support engineering-intensive sectors at least as much as labor-intensive sectors.
“The EU seems ready to raise its hand”
Karavelioğlu, who drew attention to the fact that the Trump administration, which has once again increased the tension in global politics and trade with its customs duties and demands for geographies rich in reserves, aims to restructure its international relations around foreign trade, said the following:
“The Fair and Reciprocal Trade Plan, which aims for reciprocity in the customs duties of the USA towards third countries, aims to increase competitiveness in all areas of industry by putting employment first as announced and to strengthen the economic security of the country by reducing the trade deficit. In a country where the goods trade deficit exceeded 1 trillion dollars in 2024, it is understandable that the new administration will look for efficiency in all its relations and this is a situation that will be widespread by taking as an example. The fact that the USA has a deficit of 230 billion dollars in machinery foreign trade, while China has given 310 billion dollars and the EU has given more than 160 billion dollars, and that this trend is gradually expanding towards the products with the highest technology classes, was not a situation that the American society could stomach.”
Karavelioğlu stated that the counter-statement made by the European Commission in a very loud tone, stating that the EU will continue to be committed to an open and predictable global trading system that benefits all partners, will respond firmly and immediately to unjust obstacles to free and fair trade, and will always protect European businesses, workers and consumers from unjust tariff measures, is primarily aimed at the concerns of the domestic public, and said:
“The EU’s statement, which also instills confidence in its trading partners by stating that it has the largest and fastest growing trade agreement network in the world and carries out 70% of its imports with zero customs duty, contains clues about the future of polarization. It is understood that the EU, which has long complained about the World Trade Organization’s rules that favor developing countries and is a region that implements the highest level of non-tariff barriers in the world after Russia, is ready to raise its hand. As a result, many sectors integrated into supply chains, especially machinery manufacturers, will remain in uncertainty until trade relations reach their new balance. Countries will also protect their strategic sectors to the highest level.”
“It is high time to update the incentive system”
Karavelioğlu, who drew attention to the fact that the decline in the producer price index in Turkey continued in January and that the 12-month PPI decreased to 26% in the machinery manufacturing industry, stated the following:
“In the horizontal exchange rate process where the indicators that form the balance between production cost and sales price are disrupted, PPI is a critical indicator in terms of the sustainability of businesses. Although the improvement in this data, which is above 60% by the end of 2023, is positive, it is not enough to compete with imported goods that are easily brought in thanks to the valuable TL. We should see the fact that the foreign trade deficit in Turkey has not decreased since October and even increased by 44% in December as a sign that we are having difficulty in maintaining production and cannot maintain our scales. Although a decrease has been observed in annualized machinery imports since July, it increased by 7.4% in December and exceeded 4 billion dollars. This is close to our 2-month export income.”
Karavelioğlu, who stated that while imports in Turkey increased by 10.2% in January, the sector with the biggest decrease in imports was machinery with 14% and that they hoped this data would be permanent, stated the following:
“In order to close the machinery foreign trade deficit that exceeded 15 billion dollars last year, there is a need for urgent measures to overcome the obstacles to our exports with bilateral and multilateral agreements and to ensure that manufacturing-exporting businesses can maintain their competitiveness. Maintaining the additional customs duties applied to machinery imported from countries other than the EU and FTA countries, and even making additions and relative increases, albeit in limited numbers, is a positive step in this direction. However, we know that our demand for the complete removal of the exemption with a provision that additional customs duties are also applied to imports carried out within the scope of investment incentive certificates is being kept warm by our Ministry of Trade and our Ministry of Industry and Technology. The domestic and foreign conjuncture will not be more favorable than now for this development, which we believe has become vital against the subsidized attacks of the Far East that discourage the entire world.”