Turkey — Totals Tell Tale of Terrible Trade Troubles

  • From January to August, the Turkish currency decline caused a negative trade balance.
  • In August, the negative balance tripled.
  • Germany received the highest number of exports from Turkey so far this year.

Last Wednesday, the Turkish Statistical Institute published data pertaining to the nation’s foreign trade. The situation looks troublesome. Turkey has been on the forefront of the news for the past week, regarding President Recep Tayyip Erdoğan’s support of Azerbaijan in the Nagorno-Karabakh conflict.

According to the general trade system, exports decreased by 5.7%, imports increased by 20.4%, in August 2020.

It includes providing defense support. However, upon reviewing the information, the situation is further worrisome. From January to August, the Turkish currency decline caused a negative trade balance.

If you compare the Russian economy this year, it yielded depreciation with a positive balance. Turkish manufacturing produced double negatives.

Furthermore, in August, the negative balance has tripled. The only Turkish sectors that have shown stable performance are the agriculture and fishing industries.

Additionally, since the beginning of this year to August, Turkey’s negative trade balance soared by 70%. According to the Turkish Ministry of Trade this year, the five large trading partners accounted only for the 33% of all exports.  The largest exports this year were to Germany.

Interestingly, Russia is not in the top five. Hence, the Kremlin is getting tired of Erdogan and moving away from trade deals with Turkey. Turkish Gold and foreign exchange reserves only accounted for $83.8 billion. It is 1/6 of what Russia has in its reserves.

Therefore, it is possible that Turkey could run out of funds pretty soon. As much as Erdogan has grandiose ambitions, the Turkish finances and economic situation speak volumes.

Recep Tayyip Erdoğan is a Turkish politician serving as the 12th and current President of Turkey since 2014. He previously served as Prime Minister from 2003 to 2014 and as Mayor of Istanbul from 1994 to 1998.

Erdogan supporting Azerbaijan only furthers his own interests, hoping to distract from domestic problems.  In his mind, Azerbaijan can amalgamate with Turkey, and he would get access to the Caspian Sea. This is an important strategic location.

Overall, there is not much focus on the Turkish economy. Erdogan even had the audacity to ask Russia and France to stay out of the Nagorno-Karabakh conflict. In reality, his country is on the verge of the economic collapse.

The only thing Turkey has is its NATO membership. However, NATO will not provide economic aid to Turkey. Additionally, if the Kremlin wishes, Erdogan can be broken financially. Russia has the resources to fast forward Turkish collapse. All Putin needs to do is to ban tourism to Turkey.

As of now, the only tourists in Turkey are from the former Soviet Bloc, mainly Russians. If tourism shuts down, Turkey will just crumble. That could lead to political instability or the outbreak of something more serious. In fact, many of Turkey’s opposition parties condemned Erdogan’s actions in Syria and Libya.

Erdogan’s personal ambitions are actually hurting the Turkish economy. How long his political career will last remains to be seen. Nevertheless, besides the Kremlin, the EU members are getting tired of his antics.

You can’t survive without allies, when the nation’s economy is on the verge of collapse. Turkey needs to focus on the domestic issues instead of meddling into other regions.

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Christina Kitova

I spent most of my professional life in finance, insurance risk management litigation.

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