However the export coverage import is still above 62 percent, indicating that under current circumstances the recent trend could be sustained. To recall a historical note, though: Whenever the export coverage import has declined to around 55 percent, provided that some other short-term financial ratios also deteriorated past a certain point, the Turkish economy has experienced an economic crisis.Fortunately, today we are not discussing whether Turkey will experience a new crisis -- not only because Turkey can attract quite strong and reliable financial resources, but also because Turkey’s so-called fragility indicators in the financial and fiscal sectors are also quite robust.
What I want to discuss today is the nature of recent changes in major trade sectors leading to the quality of recent investment performance by both domestic and foreign entrepreneurs. The question is whether the current direction is right or not. When we look at the trade deficit rate of change, we can see that it is declining slightly. (The trade deficit rise in 2004, 2005, 2006 and 2007 was 46, 26, 25 and 16 percent, respectively.)
Going back to the sector-wise analysis, the trade deficit is the largest in the manufacturing industry. However, the rate of increase in overall manufacturing industry exports and imports between 2005 and 2007 is in balance and the export coverage import is 73.9 percent, significantly above the average figure. Another sector with a huge trade deficit is machinery. However the rise of the export rate in this sector significantly surpasses that of imports for the last three years. The same trend is valid for machinery.
On the other hand, there are some sectors that heavily depend on oil, in which Turkey is absolutely import-dependent. These sectors are mining and quarrying; coke, petroleum products and nuclear fuel; and chemicals and chemical products. Therefore it is unlikely that in those sectors Turkey will recover from the trade deficit in the foreseeable future.
To sum up, considering the ongoing investment trends in the manufacturing industry, with an increasing contribution of foreigners in the form of Greenfield investment, it could be estimated that the rate of increase in trade and therefore the current account deficit would improve in the coming few years.
| Recent Orientations in Major Trade Sectors (2005-2007) |
| | Export
2005-07 | Import
2005-07 | Replacement
Rate |
| Mining and Quarrying | 3.617 | 63.666 | 5,7 |
| Manufacturing | 250.025 | 338.466 | 73,9 |
| Food Products and Beverages | 13.772 | 7.228 | 190,5 |
| Textiles | 28.811 | 13.524 | 213 |
| Wearing Apparel | 31.893 | 3.014 | 1.058,20 |
| Paper and Paper Products | 1.995 | 7.187 | 27,8 |
| Coke, Petroleum Products and Nuclear Fuel | 10.842 | 22.626 | 47,9 |
| Chemicals and Chemical products | 10.353 | 60.691 | 17,1 |
| Other Non-Metallic Minerals | 8.879 | 3.970 | 223,7 |
| Manufacture of Basic Metals | 28.546 | 53.843 | 53 |
| Manufacture of Machinery and Equipment | 18.875 | 43.633 | 43,3 |
| Electrical Machinery and Apparatus | 8.861 | 15.514 | 57,1 |
| Communication and Apparatus | 9.004 | 15.345 | 58,7 |
| Furniture | 7.689 | 5.584 | 137,7 |
| Total | 266.165 | 426.337 | 62,4 |
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