A Turkey Analysis: Trade Balance & Partners based on World Integrated Trade Systems (WITS) Database
“Underlying most arguments against the free market is a lack of belief in freedom itself.“ Milton Friedman
In the complex world of global trade, Turkey plays a pivotal role, contributing to a narrative of economic strength and strategic collaboration. Our exploration dives into the heart of Turkey’s economic interactions, emphasizing the symbiotic relationship between the nation and its trade partners.
Foreign trade holds paramount importance for Turkey, serving as the lifeblood of its economic activities and adaptability. This analysis focuses on unraveling Turkey’s trade balance, decoding its net position, and highlighting key trade partners in its economic stage. The significance of trade partnerships extends beyond mere data points; it mirrors Turkey’s dependency to global dynamics.
We’ll examine the dynamics of Turkey’s trade in this post, where we aim to provide a snapshot of Turkey’s position in the global economic landscape — a position shaped by trade balances and strategic alliances.
Let’s unravel the story of Turkey’s trade dynamics, where collaboration, resilience, and economic evolution intertwine, portraying a nation navigating the complexities of our interconnected world.
What caught our eyes?
In our exploration, we observed that Turkey’s net importer position in industrial intermediaries and vulnerabilities in strategic product categories and trade relations with European Union set the stage for strategic considerations.
Stagnant export revenue growth in top product categories require attention. Top revenue contributor product categories do not exhibit growth in USD terms may signal either Turkey’s failure in pricing power or not effectively using its cost advantage with its cheap currency .
Additional analysis may be considered regarding the product categories in which Turkey should enhance its focus for increased value creation. To broaden this study, further analysis in the entire commodity universe contained in the WITS data is required, assessing their revenue-generating potential, examining Turkey’s production capacity (utilizing external data sources as necessary), and formulating recommendations for further strategic actions in Turkey.
Turkey has close relations with Europe, taking advantage of being a signatory of custom union with the EU. On the contrary; the exposure to Europe, as evidenced in this blog, underscores a category risk for Turkey. Economic downturns or recessions in Europe significantly impact Turkey’s exports and imports.
Turkey’s external dependency on strategic product categories is concentrated, posing a significant risk if its relations with partners were to deteriorate.
Turkey’s heavy reliance on intermediate goods was observed, a crucial topic to be discussed further in this blog
Exports & Imports Analysis
The chronicle of Turkey’s trade unfolds with a consistent upward trajectory from 2002 to 2020, driven by global dynamics. This illustration proves that resilience in the face of the 2008 financial crisis and the implications of the 2015 European debt crisis.
Top Export Categories
The narrative of Turkey’s exports resonates in the prominence of textiles, machinery, vehicles, base metals, and minerals. Aligning with the Turkey Exporters Assembly’s findings, we witness key players steering the export landscape. These categories are the engines of Turkey’s global economic engagement.
A deeper dive into trends unravels fluctuations in natural and mineral product exports, prompting further inquiry. The resilience of necessities during the 2020 pandemic signals a market characteristic worth exploring — a testament to inelastic demand in unprecedented times.
Top Import Categories
In the realm of imports, machinery, base metals, minerals, chemicals, and vehicles are the top categories, outlining Turkey’s reliance on natural sources and intermediate goods. This underscores the imperative for strategic investments in research and development and a skilled workforce.
Trade Partnership Analysis
Diversification becomes a recurring theme in our analysis as we unravel Turkey’s engagement with over 200 export and import partners. Amidst non-growth in some categories, textiles, vehicles, and base metals stand resilient, underscoring the importance of diversified revenue streams.
Through this analysis, we have identified that Turkey engages with more than 200 distinct export partners across its top 10 product categories, showcasing a diversified revenue stream. Textiles and Apparel, Vehicles and Associated Equipment and Base Metals and Mineral Products stand out as significant contributors to Turkey’s export revenue. Despite a trend of non-growth or decline in revenue generation, these categories exhibited the highest revenue generation in 2020. Conversely, Mineral Products, Miscellaneous Manufactured Articles, Vegetable Products and Plastics demonstrated an increased capacity for revenue generation over the last five years, albeit still trailing behind the primary product categories mentioned earlier.
As indicated in exports section Turkey’s dependency is diversified for imports as well and country engages with more than 200 distinct import partners across its top 10 product categories, excluding natural product categories (mostly composed of semi-precious products, stones and powder that may be used for construction industry). Despite declining trend, machinery and mechanical appliances exhibited the highest import stream in 2020 of which has the highest number of trade partners. Conversely, plastics and chemicals demonstrated an increased import value over the last five years, albeit still trailing behind the primary product categories mentioned earlier.
The narrative pivots to Turkey’s position on the global trade stage. Maintaining a net importer status, notably with Russia and China, the dynamics with European countries signal a metamorphosis — a shift from dependence to contribution.
The presented chart offers a comprehensive view of Turkey’s evolving trade dynamics, specifically focusing on the 5-year Compound Annual Growth Rate (CAGR) in total trade values with its top 10 partners. This metric serves as a valuable indicator of the rate at which Turkey’s trade relationships have strengthened or remained stagnant over the specified period.
Notably, Turkey’s economic ties have witnessed robust growth with certain partners. The trade relations with Iraq, possibly Iran (identified as special categories), the USA, and Spain have experienced significant upward trajectories, reflecting a substantial increase in total trade values within 2002–2020.
Conversely, the data also reveals a contrasting scenario with other major partners. Relations with Germany, France, and the UK, while remaining vital, have displayed a more stable trend with relatively flat growth over the same 5-year period. This steadiness suggests a consistent but perhaps less dynamic economic engagement compared to the partners experiencing notable growth.
In essence, the chart provides a nuanced snapshot of Turkey’s evolving trade landscape, highlighting the dynamic nature of its economic relationships and pinpointing key countries that have witnessed substantial growth or stability in their trade partnerships with Turkey over the last five years.
Conclusion
In the expansive world of global trade, Turkey demonstrates practical adaptability, resilience, and strategic insight. The examination of its trade balance, net position, and partnerships unfolds a story of economic growth. As Turkey moves forward, navigating the international trade waters, the insights drawn from this analysis act as a practical guide — an aid for informed decision-making and strategic planning.
Turkey’s trade story isn’t confined to numbers on spreadsheets; it’s a living account, alive with the energy of economic interaction. As the nation faces the completixities of the global economy, the focus on trade balance and partnerships lights the way toward sustainable and robust economic development.
