Long-Term Messages In The Detaıls Of 2021 Export Fıgures

As the Foreign Economic Relations Board (DEİK), we maintain the activities that we started 37 years ago with the goal of increasing investment and trade relations between countries under our seminal vision with the motto of “Business Diplomacy”. As always, we left behind another fruitful year with our 147 Business Councils that vigorously maintain their activities all over the world.

In 2021, when our exports reached over $225 billion and broke the record of our Republic, as DEİK, we organized more than 1,500 events with our 147 Business Councils with the aim of realizing the potential in existing and new markets, increasing the mean distance of our export, and strengthening our country’s position in new regional developments. We have made over 30 foreign country visits within the scope of our events. We hosted more than 1,000 representatives of foreign diplomatic missions at our events. We visited 5 countries with our President of the Republic of Türkiye and 12 countries with our Ministers and signed new trade and investment cooperation agreements. Now 2022!

According to the base-case scenarios of 2022, many risks that may affect global economic growth and trade persist. Among the major risks that will shape trade and economic growth in 2022 are the emergences of new variants of Covid-19, the restrictive measures taken by countries as of December, the gap between the vaccination rates of developed and less developed countries remaining wide, longer than expected disruptions in the supply chains, the disruptions in the logistics sector, and the global central banks’ step towards tightening cycle to combat inflation.

Despite all these risks that will suppress short-term economic growth, we are in a period where the uncertainties about the future have decreased compare to the time of the first outbreak of the pandemic thanks to the discovery of the vaccine. As a result of the greater integration of people into the pandemic conditions and the continuation of supportive public policies all over the world, especially in developed countries, the global economic growth forecast for 2022 is at 4.9% level. In other words, considering the global growth average of the last 10 years is 3%, we will experience a lucrative year in which strong demand in foreign markets will continue.

On the other hand, the fact that we are in the rising phase of the short-term business cycle is important for our exporters’ capacity planning for only one year. The long-term increases in our total exports in line with our country targets depend on our structural policies. It is possible to exemplify the current process by means of the analysis of the symmetric shocks-asymmetric results by Robert Mundell, winner of the Nobel Prize in Economics and the mastermind of the Euro. While the pandemic shock felt by all countries symmetrically in 2020, the countries’ moving out from the deep was not simultaneous and to the same extent. While those who closely followed the agenda of supply chains, trade blocks, and digitalization and took structural steps by taking these into account won, those who failed to do so suffered a loss of market share in global trade. Export results of 2021 show that we are on the side of long-term winners beyond nominal amounts. In order tomaintain this success in the upcoming years, our DEİK Business Councils will keep setting strategies for structural issues and carrying out business diplomacy activities.

Assesing the long-term messages in the details of 2021 export figures with DEİK’s country and region based structural themes approach;

Distances are far but the potential is high…

In 2021, our exports to the South America region, which is 11 thousand km away, increased by 87%, while it grew by 45% in the US market, which is 10 thousand km away. Considering that the mean export distance of Türkiye is approximately 2,500 km, breaking the export record in the Americas region this year is also very valuable as it means that we are getting closer to our target export distance of 8,000 km. Our top priority agenda item in the region is to increase the trade volume between Türkiye and the US to $100 billion. In line with this target, our DEİK/Türkiye-US Business Council (TAİK) prepared a very comprehensive strategy plan based on 55 countries and over 40 exporting sectors, with the contributions of public and other private sector stakeholders. Of course, our goal in this project is not only our one-way trade to the US but also to increase exports to third countries by attracting US-owned investments to our country and to improve Türkiye’s strategy route in trade corridors.
Aside from increasing our export distance, Asia is the most critical region where we can balance our country’s total trade deficit by balancing our bilateral trade. The trade deficit with the countries where our Asia Pacific Business Councils operate make up 75% of our country’s total trade deficit, while China alone accounts for 40%. Trade data for 2021 also shows that this outlook persists.

Considering that the Asian market is not far for us in terms of imports, of course, it should not be far in terms of exports either. While China’s strengthening economic position and the Belt and Road Initiative create new opportunities for other countries, they also lead to new challenges and threats due to an intensified international competition environment and the vulnerabilities that may be brought by the increased dependence on China. Under these conditions, the main issue for all countries, including Türkiye, is to utilize their own advantages correctly, make the most of the arising opportunities, and minimize the effects of emerging threats and risks by managing them well. In line with the “Asia Anew” initiative announced in 2019, as DEİK, we formed our Working Groups for ASEAN and the Belt and Road Initiative to focus our country on the region in a more comprehensive and systematic way under Asia Pacific Business Councils.

In addition, with the aim of positioning Türkiye on the Belt and Road Initiative in the most constructive way, our Asia Pacific Business Councils developed 5 strategy pillars and 46 significant policy proposals through the project they carried out.

We are one of the three countries with the fastest increase in market share in Africa. Our rival is: China…
By exporting $19.4 billion to African countries in 2021, we reached the highest export figure in our history in Africa. The success we have achieved on the continent is beyond the nominal figures. In 2001, Türkiye’s share in Africa’s imports was 1%, and we ranked 21st. By 2020, we have increased our share to 3% and climbed to 9th place. Thus, Türkiye has become one of the 3 countries among the competing trade partners, that increased its share most in Africa’s imports within the last 20 years.

The most significant development in our 2022 agenda for the African region is the African Continental Free Trade Area (AfCFTA). The establishment of a continental free trade area in Africa, along with the inclusion of programs and strategies for independent development and cooperation, is of course an extremely significant turning point for the continent. According to the outputs of our report “AfCFTA Agreement and Its Impact on Turkish Companies” conducted by our African Business Councils, countries in the region such as South Africa, Egypt, and Morocco can gain competitiveness in intra-continental trade following the agreement. As a solution thereof, our Turkish business world can reach to a higher market share through the established investments we will make in the countries of the region in sectors such as energy, agriculture, food, automotive, iron-steel, and machinery.

In 2022, as DEİK, our primary goal will be to maintain effective trade diplomacy activities aimed at ensuring the free circulation of the products of Turkish companies within the continent and to increase the trade volume between our country and the African continent to $50 billion by 2030 and then to $75 billion as a result of AfCFTA.

The turning point in our trade with the EU will be green and digital transformation…

In 2021, we increased our exports to European Union (EU) countries by 33%. Leading indicators of EU growth keep expanding despite the restrictive measures. The GDP growth forecast for 2022 for the region is 4.4%. If we compare this forecast with the 10-year historical average GDP growth of 1.7% before the pandemic, it is obvious that our exporters will face a strong demand in the new year as well. However, there is a misunderstood point that I should draw attention to from a more structural perspective, which is “the perception that we have reached saturation in the EU market”. Türkiye’s share in EU imports of $5 trillion is around 1.5%, which is almost the same level as our share in world trade. However, while our market share in Africa is over 3%, our share in the EU market, in which we are in the same Customs Union, should be obviously higher.

In 2022, the top priority agenda of our European Business Councils will be the European Green Deal, integration with the EU Digital Single Market, and an expanded and more balanced Customs Union Agreement through this twin transformation.

DEİK Business Councils act as a catalyst in entering new markets…

Besides exporting to 229 countries in 2021, we increased our exports to 184 countries and broke export record in 123 countries. Historical data for the last 10 and 20 years reveal the success of foreign missions in country and region-based prioritization strategies and in entering into new markets. One of the biggest barriers our exporters face in entering new markets is information asymmetries. While countries keep expanding foreign missions such as embassies, consulates, and export promotion agencies with the aim of overcoming this problem, in our country, unlike the rest of the world, DEİK Country Based Business Councils established by Turkish business people have been given the mission of being Turkish exporters’ trade ambassador in foreign markets.

It is possible to embody the export performance of our country-based Business Councils statistically. This difference becomes visible when we divide our export markets into 3 groups as the countries where a Business Council was established for the first time in the 2010-2020 period, the countries that had a Business Council before 2010, and the countries where no Business is established yet. When we compare the export performances of these 3 groups for the period covering after 2010, we see that:
• After 2010, exports to countries with new Business Councils increased by 158% in the last 10 years,
• Exports to countries that had a Business Council before 2010 increased by 48% in the last 10 years,

• Exports to countries where no Business Council is established yet decreased by 28% in the last 10 years.
Based on these results, it is understood that our companies which are member of our country-based Business Councils increased their export performance in entering new markets, our Business Councils act as a catalyst in the country and region-based export strategies of our Ministry of Trade, and significant gains have been achieved in the last 10 years in entering new markets and diversification of export markets through this competence.

As the DEİK family, we will continue to increase our country’s business diplomacy activities through our Business Councils and regional and country-based thematic projects with our Business Councils, with the aim of maintaining the success we achieved in 2021 through 147 Business Councils and competent professional staff we have, in 2022 as well. Because our mission is to carry our strength to the world!