New Findings Reveal Turkey's Increasing Share in the EU Market Across Multiple Sectors
Foreks - A recent blog post indicated that Turkey has significantly increased its share in the European Union (EU) market, and this growth has spread across multiple sectors. The blog article titled "Impact of Demand Conditions and Market Share Developments on Turkey's Exports to the EU," written by the Deputy General Manager Altan Aldan and Assistant Specialist Didem Yazıcı, was published on the Center's Agenda page.
The article provided the following information: "External demand has slowed down in 2023 due to global monetary tightening, limiting export growth. However, in the first eight months of 2024, Turkey's exports increased by 3.9% compared to the same period of the previous year, reaching $170.8 billion. This article examines the contributions of external demand conditions and market share developments in the change of exports, specifically focusing on the European Union (EU), which is Turkey's largest export market, through monthly foreign trade data published by Eurostat.
Since the beginning of 2023, total imports to the EU have shown a declining trend. The average monthly imports, which were €252 billion in January 2023, fell to €201 billion in August 2024. Despite the unfavorable demand conditions in the EU market, Turkey's exports to the EU increased from an average of $8.7 billion to $8.9 billion during the same period.
Recent developments in Turkey's exports to the EU indicate a significant change in terms of market share. Looking at the January-August periods, Turkey's share in the EU's imports has increased, reaching a historical peak of 4.1% in 2024. On the other hand, the increase in exports stemming from a specific sector can be a risk factor in terms of sustainability. Therefore, identifying the sectoral distribution of the increase in exports to the EU and the gain in market share is important for understanding export dynamics and forecasting future export performance.
To examine this, we analyze the changes in exports by sector, separating the contributions of "external demand" and "market share" changes within the EU framework. First, we calculate the share of the mentioned manufacturing sectors in the EU's imports for the January-August 2023 period. In the second step, we compute the annual sectoral import change of the EU for the January-August 2024 period. Finally, by multiplying the calculated shares and the EU's sectoral import changes, we find the change in demand for Turkey's exports to the region caused by EU import demand.
When we derive this demand-driven change from the corresponding changes in the EU’s imports from Turkey, we obtain the change caused by market share. In other words, we can see the contribution of market share in the sectoral changes in Turkey's exports to the EU.
According to this analysis, while the contribution of the EU's total import change to Turkey's export change is negative in almost all sectors, the majority of sectors have achieved an increase in exports by increasing their market share in the EU. This situation indicates that Turkey's competitiveness in the EU market has increased. For instance, in the motor vehicle manufacturing sector, which has the highest share of about 21% in Turkey's exports to the EU, the demand-driven decline in EU imports resulted in a decrease of €630 million in the sector's exports for the first 8 months of 2024 compared to the same period in 2023. However, during the same period, the gain in market share contributed €793 million to exports, leading to an overall increase of €163 million in the sector's total exports. The highest contribution from market share gains to exports was recorded in the basic metal industry, amounting to €976 million. Overall, while the decline in the EU’s imports resulted in a weakening of €2.4 billion in exports, the market share gains contributed €3.5 billion to exports, thereby resulting in a total increase of €1.1 billion in manufacturing exports.
Additionally, by dividing the EU market share and changes in EU import demand, calculated in euros, by the sectoral exports for the January-August 2023 period, we assess the contributions to sectoral export changes in percentage points. Accordingly, in the motor vehicle manufacturing sector, which has the highest share in Turkey's exports to the EU, the decline in EU demand exerted a negative impact of 4.7 percentage points, while the market share gains contributed 5.9 percentage points to export growth, resulting in an overall increase of 1.2% in total exports. Proportionally, market share gains in the petroleum products and other transport vehicles sectors contributed significantly to export growth. Similarly, despite the declining import demand, gains in market share have led to increases in exports in the basic metal industry, chemical products, electrical equipment, non-metallic mineral products, and computer and electronics manufacturing sectors. However, weak demand conditions have negatively affected exports in clothing, machinery equipment, fabricated metal products, textiles, and leather goods.
In summary, our findings indicate that Turkey has clearly increased its share in the EU market recently, and this growth has spread across various sectors. With the expected alignment of the EU’s import demand with future projections, we anticipate that in addition to market share gains, the increase in external demand will also support our exports.