Turkey’s export sales hit a record high last year as the depreciation of the lira made companies’ products more competitive abroad, with the country also benefiting from closer economic ties with Russia.
Turkey saw a 13 percent rise in exports by value, with sales reaching $254 billion in 2022, the country’s President Recep Tayyip Erdoğan said in a televised address on Monday.
“At a time when the world is grappling with serious political and economic problems, it has not been easy to keep investing, boosting employment and boosting exports,” he said. “This shows that Turkey is no longer a country that is crushed by crises, but a country that overcomes crises.”
Turkey has stepped into a void created by Western sanctions and has traded more with Russia over the past year. Exports to Russia more than doubled to $1.31 billion in December alone, the Commerce Ministry said. Turkey has refused to join sanctions against Russia, arguing that a balanced approach can help it mediate between Kyiv and Moscow. Erdoğan helped broker a deal in July that would 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 eroded his party’s popularity. Inflation has been above 80 percent for months, in large part because of his unorthodox monetary policy. On Erdoğan’s orders, the central bank cut interest rates to 9 percent, losing nearly 30 percent of the lira’s value against the dollar over the past year.
The weak lira has pushed Turkey’s trade deficit to $110.2 billion in 2022 as import costs rose 34 percent to $364.4 billion, according to the Commerce Ministry. Turkey is a major importer of crude oil and other energy products. Brent, the main international oil benchmark, rose more than 10 percent in dollar terms in 2022 to end the year at around $85 a barrel.
Erdoğan’s no-frills growth policy focuses on the devalued lira boosting production and cheap credit stimulating consumption.
In recent days, Erdoğan has unveiled other popular stimulus measures, including early retirement for millions of workers and doubling the minimum wage to 8,500 TL, or $455 a month.
The increase in the minimum wage will give a big boost to workers’ wages across the Turkish economy, not just those at the bottom of the wage ladder. According to JPMorgan, pay increases in the first quarter would trigger an economic boost, with production now expected to rise 7.8 percent on an annualized basis, versus the previous forecast of 5.3 percent.
Longer term, JPMorgan said the government’s unconventional economic policies are “unsustainable” and will make inflation worse. The bank expects Turkey to slip into recession after the third-quarter elections.