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Video: Turkish economy slows

11-01-2012 13:59 BJT

In recent years, Turkey has had one of the world’s fastest growing economies. But now, the country’s finances are beginning to show signs of strain. With the national trade deficit widening, economic growth is now under threat. Natalie Carney reports from Istanbul.

As a bridge between east and west, Turkey is very much a gauge of economic conditions in both hemispheres.

Exports may have increased by 21 percent last month, but a crippling European economy has seen Turkish products to the region drop by roughly 10% since the beginning of the year, forcing exporters to look towards other markets.

While the EU was snapping up Turkish automotive and electronic goods, Turkey’s trading partners in the Middle East and North Africa have been more interested in the less profitable textiles industry.

"We are doing extremely well in Middle East, North Africa and sub-Saharan Africa, where the share of which is improving in total trade, but all of these are cyclical and really not too high margin businesses."

But even that’s not what it used to be. Uğur Aras ships 99% of his clothing inventory abroad.

"We were selling our goods mostly to Eastern Block and Arab countries. But, the sales reduced because of the war in Arab countries and mortgage crisis in Eastern Bloc."

This improvement to Turkey’s foreign trade balance is largely being credited to a slowdown in the domestic economy, the diversification of export markets, declining oil prices, as well as a surge in gold sales, particularly to sanction-hit Iran.

In the last year, gold and other precious metal exports reached rough 14 billion U.S. dollars, accounting for roughly 75% of Turkey’s economic growth.

And according to Atilla Yasilada, 80% of that gold ends up in Iran through illegal channels

"To the extent our economy minister. Mr. Zafer Calyihan takes credit for an export miracle is not true because gold exports are not through our efforts. And more importantly Central Bank conducting or planning monetary policy on these foreign trade figures including gold is simply not realistic. Disappointments are likely to be on the horizon in the short term."

Still, with a reduction in its foreign trade gap, Turkey is likely to continue attracting more foreign investment from both sides of the Bosporus.

Editor:James |Source:

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