Business is booming.

Turkish exports hit record high in 2022

Sales of Turkish exports hit a record high last year as the slump in the value of the lira made businesses’ products more competitive overseas, with the country also benefiting from closer economic ties to Russia.

Turkey recorded a 13 per cent rise in exports by value, with sales hitting $254bn in 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 hasn’t been easy to continue uninterrupted investments, increase employment and increase exports,” he said. “This shows that Turkey is no longer a country that is crushed by crises, but a country that manages crises.”

Turkey stepped into a void created by western sanctions and traded more with Russia over the past year. In December alone, exports to Russia more than doubled to $1.31bn, the trade ministry said. Turkey has refused to join sanctions against Russia, arguing a balanced approach can help it mediate between Kyiv and Moscow. Erdoğan helped broker a deal in July to allow Ukraine to export its grain despite a Russian blockade of its ports.

The surge in exports is good economic news for the president, who faces re-election in June.

A cost of living crisis has eaten into his party’s popularity. Inflation has been above 80 per cent for months, in large part because of his unorthodox monetary policies. Under orders from Erdoğan, the central bank has reduced the benchmark interest rate to 9 per cent, shaving off almost 30 per cent of the value of the lira against the dollar over the past year.

The weak lira has swelled Turkey’s trade deficit to $110.2bn in 2022, as the cost of imports jumped 34 per cent to $364.4bn, according to trade ministry figures. Turkey is a major importer of crude oil and other energy products. Brent, the main international oil benchmark, rose more than 10 per cent in dollar terms in 2022 to end the year around $85 a barrel.

Erdoğan’s growth-at-all-costs policies centre on the devalued lira boosting manufacturing and on cheap loans encouraging 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 minimum wage increase will provide a big boost to wages for workers across Turkey’s economy, not just those on the lowest rung of the salary ladder. JPMorgan said pay rises would ignite a burst of economic activity in the first quarter, with output now expected to increase at a 7.8 per cent annualised rate, from its previous forecast of 5.3 per cent.

Longer term, JPMorgan said the government’s unconventional economic measures were “unsustainable” and would worsen inflation. The bank is expecting Turkey to fall into a recession in the third quarter, following the elections. 

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