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 2 months of 2025 were 4.3 billion dollars. Stating that the EU, which now feels more isolated against Russia, is on the verge of a historic transformation and that important developments that will directly affect Turkey are taking place, Kutlu Karavelioğlu, Chairman of the Machinery Exporters’ Association, said, “The shaking off of Europe, which raised its hand in trade wars, carries Turkey’s importance as a strategic partner to a historic point both in the fields of economy and industry and in terms of external security. In this process, Turkey’s investment infrastructure in technology-intensive sectors such as machinery becomes even more meaningful.”
According to the consolidated data of the machinery manufacturing industry, total machinery exports, including free zones, decreased by 4.3% in the January-February period and became 4.3 billion dollars. Machinery manufacturers, whose exports decreased by 8.8% in terms of quantity, increased their average export unit prices by 5%. With the effect of this year’s short work schedule, February exports decreased by 5.8% in value and 11.6% in quantity. According to annualized data, the decrease in exports remained at 1.8%, reaching 24 billion dollars. The sector, which felt the effects of the recession in Germany, where exports decreased by 11.1%, experienced a 14.3% decrease in the US market, where the import approach has changed radically. Although the decrease in exports to the US and Russia slowed down compared to the previous month, machinery exports to Russia fell below 100 million dollars per month under widespread sanctions. The increases achieved in Italy, the United Kingdom, Spain, Poland and Romania offset the contraction in the main markets to some extent. While leather processing machinery, rolling and casting machinery, and construction and mining machinery were the sub-branches that experienced decreases of over 20% in the 2-month period, turbine, turbojet and hydraulic systems, textile and apparel machinery, packaging machinery, and internal combustion engine and parts exports increased by over 10%.
“Morale is high in the shaken EU”
The Chairman of the Machinery Exporters’ Association, Kutlu Karavelioğlu, who discussed the Turkish dimension of strategic decisions taken during a period when countries’ foreign trade and defense paradigms are experiencing a historical transformation, said the following:
“The irregular environment in which the new US administration has gone beyond the expectations of the established order in different areas, including NATO common interests, is causing
all countries to review their defense and infrastructure approaches. The EU, which now feels more alone against Russia, is on the verge of a historic transformation and important developments are taking place that will directly affect Turkey. Germany’s allocation of 50 billion euros every year for urgent infrastructure and defense investments and the loosening of the debt brake in the constitution for higher defense expenditures mean a change in an 80-year paradigm for this country. The 800 billion euro minimum spending budget that came to the agenda with the ReArm Europe plan means that we will see a monetary abundance that we were used to seeing in the US in Europe as well. In addition to this wind, the expectation that the ECB’s interest rate cuts will increase economic vitality is increasing the market values of European companies. The shake-up of the old continent, which has raised its hand in trade wars, carries Turkey’s importance as a strategic partner to a historical point both in the economy and industry and in terms of external security. Turkey’s investment infrastructure in technology-intensive sectors such as machinery is gaining even more meaning.”
“An inviolable Single Market is an advantage for us”
Karavelioğlu, who stated that these state-centered initiatives are inevitable in an environment where machinery and equipment manufacturing companies in Germany experience significant losses in foreign markets and machinery exports are expected to decrease by 5.0% in nominal terms in 2024, said the following:
“According to research by the Federation of German Industry (BDI), in this period when one-third of companies in Germany no longer want to invest in this country, the issue of how the additional investment of 1.4 trillion euros required for the full realization of the green transformation by 2030 will be met seems uncertain. The Clean Industry Agreement developed in the EU, which continues its new searches from four sides to overcome its competitiveness problems, aims to reduce bureaucracy, strengthen the Single Market in a way that cannot be violated by new members, and reinforce the decreasing interest of young generations in the transformation process by encouraging digitalization and innovation. In this process, which includes renewing industrial policies with simplification packages, the EU, which is trying to develop de-risking, i.e. risk-free, tools against the tariff barriers of the USA, will get a little closer to Turkey, which has an integrated production and trade system with itself. Updating the Customs Union, which has completed its 30th year, by focusing on green and digital transformation and competitiveness will open the way for us a little more.
“We should also develop strategies based on reciprocity”
Karavelioğlu, who addressed the de-risking policies of the EU, which creates regulatory frameworks that will grow the necessary ecosystems to make competitiveness sustainable and increase market diversity, stated the following:
“While the EU is trying to shape supply chains with the Global Gateway project, it is signing new Free Trade Agreements with MERCOSUR countries and emerging markets such as South Korea. When the FTA developed by the EU, which defines India as a ‘trusted partner with like-mindedness’, is completed with this country, customs duties, which are supposedly 7.5% but reach 30% with sectoral or regional additions, will be eliminated, and the demand for European machinery and equipment will increase rapidly during the country’s modernization process. While the amount of machinery Turkey imports from India has multiplied and exceeded 1 billion dollars due to unbalanced taxes in the last 5 years, we have fallen far behind our potential with our annual exports reaching only 270 million dollars. While the protectionist measures of the US, which have not yet affected us, are waiting as a risk on the horizon, we should also develop our own de-risking policies and implement similar FTAs with markets such as India, where machinery demand is high. We need to develop reciprocity-based strategies, which the US also targets, not only in India but also in the Far East, where machinery manufacturers are protected by high taxes and therefore the ratio of our exports to imports is negligible.”
“Strengthening Euro will alleviate the effects of exchange rate pressure”
Karavelioğlu drew attention to the fact that machinery and equipment investment expenditures, which contracted in the second and third quarters due to tightening policies, showed growth again by increasing by 4.2% in the last quarter and concluded his words as follows:
“While the general manufacturing industry grew by 0.5% last year, the machinery and equipment industry experienced serious difficulties with its production shrinking by 8.5%. In addition to the ongoing stagnation on the demand side, exchange rate levels that limit our competitiveness both domestically and internationally cause irreparable losses in new orders and therefore in our market shares. The producer price indexes, which have rapidly fallen to reasonable levels, show that the local industrialists are not responsible for high inflation and although they give hope for new investments, it is understood that suitable conditions on the financing side will not be formed for a while. Under these conditions, the recent upward trend of the euro, which has a significant share in our exports, can be evaluated as a positive factor that will support the demand from the EU and reduce the pressure on companies caused by the widening inflation-exchange rate gap.”