Murat Şenol: Is the export really going well and is the exporter supported?

In the new EXPERIMENT, which is tried to be implemented as a solution to the economic problems we experience in Turkey, it is aimed to decrease the foreign trade deficit by decreasing the value of TL, increasing the Export and Tourism revenues, and reducing the imports. In this way, instead of financing the country’s savings deficit by borrowing from foreign countries, it was aimed to close the savings deficit by giving foreign trade surplus thanks to the less valuable TL support.

Although the policies have been determined within this framework, are the facts like this?

While the January 2021 Foreign Trade Deficit was 3 billion 604 million USD, the January 2022 foreign trade deficit was 10 billion 261 million USD. While the import coverage ratio of exports to imports was 83.2% in January 2021, the ratio of exports to imports decreased to 63.2% in January 2022. While the total Foreign Trade Deficit in 2021 is 46 billion 130 million USD, the ratio of exports to imports in the same period is 83%. The main reason for the increase in the foreign trade deficit in January 2022 is the increase in global energy prices. With Russia’s attack on Ukraine in February, the price of oil per barrel increased by 15% in dollar terms, while the prices of coal and natural gas continue to increase. Despite the depreciation in TL in the coming months, Compared to 2021, the foreign trade deficit in 2022 is likely to worsen, contrary to expectations. Whether the program will be successful or not will become clearer in the upcoming period according to the developments in the Foreign Trade Deficit.

When we analyze the data of TURKSTAT, JANUARY 2021 and JANUARY 2022 comparatively, Agricultural exports increased from 4% to 4.1%, Mining increased from 1.7% to 2.1% in total exports. While the decrease in the share of these sectors is an expectation in our favor, unfortunately it is increasing. However, the Manufacturing Sector, which is expected to increase, decreased from 93.8% to 93.3%. The total share of High and Medium high technology products in exports increased from 38.6% to 35.9%, and the total share of Medium low and Low technology products increased from 61.4% to 64.2%. This process has been in a downward trend since 2020. Now we export lower quality technology, naturally the prices are lower.

On the other hand, when we look at the Unit Value Indices, while the export unit index increased by 9.5% in 2021, the import unit index increased by 25.4%. that is, the price of the goods we sell increased by 9.5% and the price of the goods we bought increased by 25.4%. The price of the goods we sell has increased less than the price of the goods we buy. This means more exploitation of our country’s resources.

The rate of foreign trade, which was 97.6% in December 2020 and calculated by dividing the export unit value index by the import unit value index, decreased by 14.8% and became 82.8% in December 2021. A decrease in this ratio means that export prices are lower than import prices. In this case, Foreign Trade develops against our country and reduces the level of welfare.

While there are developments against our country in the Export-Import unit value index and terms of foreign trade in foreign trade, the Foreign Trade Deficit is on the way to turn into an even bigger problem with the effect of the energy prices, which increased even more with the Russia-Ukraine tension. As a result, in the process we live in, our resources are transferred abroad at cheaper prices through Export and Tourism, and more expensive goods are imported abroad.

While these negative developments are taking place, it is stated by government officials that great importance is attached to exports. At the same time, decisions are taken against exporters. It has been made compulsory to transfer 25% of the export value brought by the exporter to the CBRT. Considering the dependence of exports on imports in our country, it is clear how much of a problem this creates for the exporter. On the other hand, this 25% price could be changed by the exporter at any time according to the exchange rate in the market before the regulation. When we think that there are 3-5% exchange rate movements during the day, the day

Capturing the right moment and fixing the rate could create significant profit/loss. However, now the exporter sends the request to the bank, the bank processes the transactions, and when it is available, it performs the transaction according to the exchange rate published by the CBRT every hour, 1-2 hours later, and the option to trade in exports has been eliminated.

New Economy ModelIn the process that we have lived since the beginning of the EXPERIMENT defined as ”, it is seen that our resources are/will be transferred abroad at cheap prices mostly through Export and Tourism, and more expensive goods are imported/will be made abroad. Thus, the Foreign Trade Deficit is increasing rapidly and contrary to the expectations, the depreciation of TL does not have a positive effect on foreign trade.

On the other hand, it is important to support Export and Exporter. However, in a panicked and poorly planned foreign trade policy in a model based on the foreign trade deficit, the cheap transfer of our country’s resources to foreign countries, whether the foreign currency comes or how it comes, may cause major problems in the future of our country. It will be healthier for the exporter to rest and to decide on financial and operational supports that will relieve them by mutual consultation.

Murat SENOL – The Economist www.bankavitrini.com

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