Turkey’s export sales reached a record high last year as the depreciation of the lira made business products more competitive abroad, while the country also benefited from closer economic ties with Russia.
Turkey recorded a 13 percent increase in exports by value, with sales of $254 billion by 2022, said Recep Tayyip Erdoğan, the country’s president, in a televised speech on Monday.
“At a time when the world is struggling with serious political and economic problems, it is not easy to continue investment without interruption, increase employment and increase exports,” he said. “This shows that Turkey is not a country crushed by the crisis, but a country that manages the crisis.”
Turkey stepped into the vacuum created by western sanctions and other trade with Russia over the past year. In December alone, exports to Russia more than doubled to $1.31bn, the trade ministry said. Turkey refused to join the sanctions against Russia, arguing that a balanced approach could help mediate between Kyiv and Moscow. Erdoğan helped broker a deal in July to allow Ukraine to export grain despite Russia’s blockade of the port.
The surge in exports is good economic news for the president, who is up for re-election in June.
A cost of living crisis has eaten into his party’s popularity. Inflation has exceeded 80 percent for months, largely due to unorthodox monetary policy. At the order of Erdoğan, the central bank has reduced the benchmark interest rate to 9 percent, shaving off almost 30 percent of the value of the lira against the dollar in the past year.
The weak lira has widened Turkey’s trade deficit to $110.2 billion in 2022, as import costs rose 34 percent to $364.4 billion, according to trade ministry figures. Turkey is a major importer of crude oil. Brent, the main international benchmark, rose more than 10 percent in dollar terms in 2022 to end the year at around $85 a barrel.
Erdoğan’s growth-at-all-costs policy centers on a devalued lira to boost manufacturing and cheap loans to encourage spending.
In recent days, Erdoğan has unveiled more popular stimulus measures, including early retirement for millions of workers and doubling the minimum wage to TL8,500, or $455 a month.
The increase in the minimum wage will give a big boost to wages for workers in the Turkish economy, not just the lowest on the pay scale. JPMorgan said the wage increase would lead to a burst of economic activity in the first quarter, with output now expected to increase at an annual rate of 7.8 percent, up from a previous forecast of 5.3 percent.
Longer term, JPMorgan said the government’s unconventional economic measures are “unsustainable” and will increase inflation. The bank expects Turkey to enter recession in the third quarter, after the elections.