Machine Exports Reach $23.3 Billion in the First 10 Months

According to the consolidated data of the machinery manufacturing industry, as of the end of the first ten months of the year, Turkey's total machinery exports, including free zones, amounted to 3.1 million tons, reflecting a 4.3% decline in quantity, while the value remained stable at $23.3 billion compared to last year. In October, the average export price per kilogram reached $7.5, with exports surpassing $2.5 billion again, achieving a monthly increase of 4.3%. The sectors with the highest machinery exports during the ten-month period were household and industrial refrigeration machines, followed by internal combustion engines and equipment, as well as construction and mining machinery. Pumps, compressors, tractors, and agricultural and forestry machinery also surpassed the $1 billion threshold. Despite a 5% decline in export markets, Germany led with exports exceeding $3 billion during this period, followed by the USA with a 7.5% increase, after Russia, which experienced a 15.8% drop.

With the elections in the USA, Kutlu Karavelioğlu, president of the Machinery Exporters Association, indicated that the uncertainties affecting the global economy this year have concluded for now. He assessed the potential impacts of Trump's possible return as President on global exports as follows:

"It is clear that the Trump administration's promises of imposing high tariffs on imports will initiate a new protectionist war on a global scale, leading to a noticeable contraction in world trade. The rising walls may not only weaken global growth but also jeopardize the ongoing anti-deflation efforts through additional tariffs that target producers rather than products. For sectors like ours, where the primary market is Europe, exporting mostly in euros while importing in dollars, the increasing strength of the dollar will have negative effects on profitability and competitiveness. The rapid rise of our machine exports to the USA in recent years was a consequence of our efforts to mitigate currency risk. We believe that new disruptions in supply chains will create new opportunities for Turkey, where collaborations in the US market are increasingly strong. On the other hand, we should expect countries that have preemptively announced limitations on trade with the USA to develop much more aggressive strategies, including rerouting trade pathways in the rest of the world. The process will not evolve favorably for those hesitant to build their walls."

Karavelioğlu also noted that the reasons for businesses in strong industrial sectors in the USA and Germany to demand protection are not as attention-grabbing as their results:

"The fact that international organizations are forced to update their economic forecasts and calculations almost every 2-3 months is an indication that traditional methods are insufficient to comprehend and characterize the ongoing changes. The current difficulties and challenges in industrial transformation processes are much more profound. A 2% decline in global machinery turnover creates significant problems in developed countries dominated by traditional industrial sectors. Many indicators, such as the PMI Index in Germany falling to 40.6 in September, raise concerns about the shift of production to countries with lower production costs. This trend crystallizing in voter behavior in the USA serves as a sign that developed countries are determined to protect their manufacturing sectors such as machinery, automotive, and defense industries. To protect our competitiveness, which has allowed us to navigate between these polarizations until now, we must focus more than ever on improving our production scales in niche areas and the diversity of our technology levels. We need to make public investment, innovation, and sustainability support more functional in the targeted sectors."

Regarding the discrimination objection from China, Karavelioğlu stated that Turkey's annual machinery trade deficit of $16 billion, three-quarters of which comes from China, is drawing increasing attention in the country:

"We do not find China's objection to establish a more balanced trade structure with our Ministries to be reasonable, as it claims this situation constitutes discriminatory trade protection. For years, we have criticized the one-sided relationship with a country where we have almost never sold goods, suggesting, 'If they want so much, let's sign a Free Trade Agreement.' In the first nine months, despite an 8.6% decline, our imports of Chinese machinery reached $8.2 billion. We hope for clearer improvements regarding the conditions that force us to sell only about $150 million worth of machinery annually to China, which imports around $20 billion from Germany, where our sector is highly integrated, and over $220 billion from around the world."

Karavelioğlu emphasized the importance of the Trade Ministry's statement that half of the growth in the second quarter came from net goods and service exports:

"It is significant that the finding in the Ministry's monthly presentation shows a weak trend in foreign demand, the main determinant of exports, which is below historic averages. Almost all domestic markets are experiencing weakened demand, investment, and production, with declining capacity utilization rates. However, this situation leads to a reduction in overall export prices, allowing the increase in value to actually be achieved through larger increases in quantity. The situation is different in machinery, where the decline in quantity is offset by rising export unit prices. These price adjustments, resulting from rising domestic production costs, certainly have a limit. If costs become unmanageable, job losses may occur. In our sector, which has seen a 40% increase in employment between 2019 and 2023, employment growth halted in the last 12 months, even experiencing a slight decline of 1%. We also see that machinery production, which increased by 72% in the same four years, has dropped by around 8% this year. To maintain our competitiveness, the trend needs to be reversed swiftly."