ISTANBUL, July 13 (Xinhua) — The increasing production costs and unfavorable exchange rate are dampening Türkiye’s export competitiveness, casting doubt on its 2024 export target of 267 billion U.S. dollars, according to experts.
Speaking at a meeting in Istanbul on Thursday, Mustafa Gultepe, chairman of the Turkish Exporters Assembly (TIM), emphasized the significant hurdles encountered by Turkish exporters.
Production costs have surged by more than 100 percent over the past year, with some sectors experiencing even higher increases, surpassing 120 percent, said Gultepe.
Despite a high inflation rate, the increase in the dollar exchange rate remained at 25 percent throughout the first half of the year, severely impacting exporters’ profitability, the chairman added.
He stressed the importance of aligning the exchange rate closely with inflation, suggesting a permissible deviation of no more than five percentage points to support exporters.
Gultepe believes that the current U.S. dollar (USD) to Turkish lira (TRY) exchange rate of approximately 33 falls below its optimal level.
Murat Tufan, an analyst from the EkoTurk broadcaster, provided further insights, pointing out that over the past year, the USD/TRY exchange rate has risen by an estimated 20 percent to 30 percent. In contrast, inflation, particularly measured by the producer price index, has surged to over 80 percent, he said.
“Türkiye’s products have consequently become more expensive, diminishing our competitiveness in the global market,” Tufan observed.
Tufan pointed out that Türkiye’s central bank is actively suppressing the appreciation of the dollar to protect reserves and curb excessive demand for dollars, despite concerns from the business community about the low exchange rate.
“These concerns voiced by the business community are urgent calls for support, reflecting our current struggles to maintain export momentum,” he said, underscoring the looming expectation of potential rises in unemployment rates, slowdowns in production, and the prospect of negative economic growth in the country.
To address the ongoing high inflation rate, which surged to 71.6 percent in June, Türkiye has implemented various measures including keeping the interest rates high.
On Thursday, Treasury and Finance Minister Mehmet Simsek said that the worst is over in inflation, and it is expected to decrease to approximately 60 percent in July and stabilize around 50 percent or lower in the subsequent months.
“We aim to achieve an inflation rate of around 38 percent by the end of the year, which aligns with the Central Bank’s target. There is tolerance up to 42 percent,” he said optimistically.
Source Agencies
