TURKEY’S FOREIGN TRADE

I. THE DEVELOPMENT OF TURKEY’S EXPORTS

1923-1930

• During the first years of the newly established Turkish Republic, there was not a developed,
well-functioning industry and trade structure. The Ottoman Empire was mainly interested in
military and bureaucratic affairs and thus give little importance to industry and trade.

• On the other hand, there was an industrial structure based on workshops and guilds in the
Ottoman Empire, especially in the early 19th century. Foreign trade was conducted on the basis
of raw materials’ trade. Main export goods were cotton thread, cloth and silk fabric. However,
beginning with the late 19th century, the Ottoman industry deteriorated.

• Physical infrastructure was not suitable for the development of trade. Besides, the World War I
and the ensuing wars had catastrophic effects on the Empire’s industry, which was generally
located in İzmir and İstanbul.

• In 1923, the İzmir Economic Congress was held in İzmir. During the Congress, several
decisions were taken and an economic policy was devised that was liberal to a great extent and
without the adoption of a discouraging attitude towards foreign direct investment, it displayed
diligence and determination to realize “economic development” by means of private sector.

• But, along with the above-mentioned adverse conditions, the rules of the Treaty of Lausanne
regarding the foreign trade regime constituted another problem for the new Republic. The
Treaty stipulated that Turkey would implement the customs tariff determined during the
Ottoman Empire until 1929. Therefore, first customs tariff regulations were introduced in 1929
which were based on the ideal of creating “national economy”.

• While, Turkey’s export earnings were US $50.8 million and imports expenses were US $86.9
million in 1923, export earnings reached US $71.4 million and imports expenses US $69.5
million in 1930. During this period, Turkey’s foreign trade ran constantly deficit except for
1930. Sectoral composition of exports indicated huge dependence on agricultural products
which equaled 86% of total exports, and industrial goods constituted 8.6%. Main export goods
were tobacco, dried seedless grape, cotton, hazelnut, olive oil, angora and rose oil.

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• Foreign trade structure showed great resemblances to the contemporary structure in terms of
the main trading countries. Leading export markets of Turkey were the UK, Italy, France,
Germany and the US. However, in the later part of the period, Germany’s share of Turkey’s
exports began to rise.

1930-1950

• The period following 1929 showed fundamental changes in macro economy and the foreign
trade of Turkey. Since the Great Depression had catastrophic effects on world economy and
this period coincided with the end of the binding constraints placed upon Turkey by the Treaty
of Lausanne, Turkey adopted a protective and interventionist foreign trade policy. Main
objective of the macro economic policy was defined as to create a self-sufficient economy and
thus, exports were delegated to a lower position in terms of policy priorities. During this
period, policies to create industries which would meet the demands of domestic economy and
whose raw materials would be supplied domestically, were implemented and those industries
were protected by high customs tariff and currency controls.

• Rapid industrialization was observed during the 1933-1938 period. State actively intervened in
the economy by establishing and running factories and First Five Year Industry Plan was
implemented. However, due to the breakout of the World War II, Second Five Year Industry
Plan wasn’t put into implementation.

• Especially during the World War II years, a system restricting foreign trade was devised and
backed by several Laws. On the other hand, this period was also witnessed the establishment of
the first Exporters Association “Doğu ve Cenub Vilayetleri Mıntıkası Canlı Hayvan
İhracatçıları Birliği T.A.Ş.” taking into account the management needs in foreign trade.

• After the World War II, in parallel with the liberalization movements, widely observed in
international trade, several important steps were taken in Turkey’s foreign trade. In 1947, the
Turkish lira was devaluated by 116% against the US $, restrictions on imports were decreased,
and a new Customs Law was enacted in 1949.

• Turkey became a member party of the World Bank, IMF, OEEC and GATT.

• Except for 1938, Turkey’s foreign trade had run surplus until 1946. However, though the
devaluation due to the decreased imports restrictions and low supply elasticity of export goods,
foreign trade began to run a deficit from 1947.

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1950-1960

• Considering the developments observed in domestic politics and world economy, more liberal
foreign trade policy was adopted in early 1950s. As a result of this policy, in 1950-1952, 65%
of imports were gradually liberalized. However, these liberalization efforts started to lose
momentum due to the increasing foreign exchange shortage.

• Constant foreign trade deficits necessitated the adoption of tighter measures and in 1958; a
“Stability Package” was adopted to reduce imports by tariff and quota restrictions. However, in
the same period, due to the slow down of agricultural development, fixed exchange rate policy
and subsidy policy, export earnings decreased from US $345 million in 1957 to US $247
million in 1958.

• Essential characteristics of this period can be summarized as chronic current account deficit,
exports highly dependent on weather conditions and imports volume restricted by foreign aids
and credit conditions.

• In this period, 70% of total exports were constituted by agricultural products. Main export
goods were tobacco, hazelnut, dried fruits, cotton and wheat.

1960-1970

• Following 1960, a new period of radical changes in economy and foreign trade policies were
observed. This period was called Planned Development Period and conducted by the Five Year
Plans.

• In this period, imports substitution policy was adopted as an industrialization policy. During
the 1960s and 1970s, this policy was intensively implemented and discouraging exports and,
production for domestic needs was stimulated and the industry was protected.

• However, even though the exports’ volume passed the Five Year Plan targets, its main
structure became more dependent on agricultural goods, which constituted 80% of total
exports.

• Another important development in this period was the signing of the Agreement Establishing
an Association between the European Economic Community and Turkey in 1963.

1970-1980

• Comprehensive tax incentive regulations and policies stimulating industrial goods exports were
implemented in 1970s. However, due to the deterioration widely experienced in the world

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 economy made the efforts insufficient. Especially, fixed exchange rate policy, expansion of
domestic demand, supply shortages for various goods, reduced the goods surplus directed to
exports and the share of Turkey’s exports in the world exports showed continuous decline.

• During the 1970s, two oil crises took place and adversely affected Turkey’s foreign trade.

• Turkey’s current account deficit continued in this period.

• While agricultural products exports constituted a great part of Turkey’s exports, share of
industrial goods rose to the level of 27%.

1980-1990

• 1980 was a turning point in Turkey’s economy and foreign trade policies. In parallel with the
deteriorating conditions in the world economy after oil crisis, some problems began to appear
necessitating tight measures.

• On January 1980, a package of economic stability measures known as “January 24 Decisions”

were adopted to restore the deteriorated economic problems, in which the establishment of free
market economy and integration with the world economy were main aims. By this program,
Turkey abandoned “imports substitution” policy and an industrialization strategy based on
exports was adopted.

• Transportation, communication and other infrastructure investment gained momentum and

dealing with exports became a respected profession.

• During this period, bureaucratic obstacles were eliminated to a great extent. With Decree No.
30 Regarding the Protection of Turkish Lira’s Value, further liberalization efforts took place in
foreign exchange and imports of foreign exchange were permitted. In 1990, the lira was further
strengthened by making it more a convertible currency and with the amendment in the Law on
Turkish Lira’s value protection by Decree No. 32, exports and imports with the lira were
allowed.

• Foreign Trade Capital Companies model was established and envisaged to carry out foreign
trade marketing activities of the constituting companies and to give service like promotion. The
share of these companies during 1981-1989 period rose to 35%.

• With the January 24 Decisions, the Turkish lira was devaluated by 49% against the US dollar,
which limited domestic demand with the aim of accelerating exports.

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 • The fixed exchange rate policy was abandoned, and a flexible exchange rate policy was
adopted. Exports were encouraged with several incentive instruments.

• The process of liberalization in foreign trade continued to increase until 1983. Negative list
application replaced with a positive list application in imports and quantity restrictions were
replaced with tariff measures and protectionist measures were reduced.

• License procedure for exports was abolished and the principle of export liberalization adopted.

• In 1987, in order to increase Turkish companies’ competitiveness in the international markets

and to support Turkey’s export strategy, the Turkish Eximbank was established.

• Following these developments, total export volume increased dramatically. While the exports
earnings were US $2.3 billion in 1979, it increased to US $12.9 billion in 1990. Moreover, the
composition of exports changed. While industrial goods constituted 36% of total exports in
1980, their share rose to 80% in 1990.

1990-2000

• External conditions like economic stagnation experienced in world economy during 1990s,
Gulf War and chronic problems like high inflation rates, budget deficits, rising debt stock
deteriorated Turkey’s economy and a severe economic crises in 1994 broke out. To cope with
the crises a Stability Package known as the “April 5 Decisions” were adopted.

• These developments reduced the increase rate of Turkey’s exports and from 1990 to 1993,
exports rose 18%.

• Devaluation in 1994 and the implementation of economic measures had positive effects on
Turkey’s competitiveness in international markets.

• Turkey became a member of the World Trade Organization in 1995 and the Customs Union
with the European Union was established.

• Direct and cash incentives based on export performance was abolished and instead, inward
processing regime was put into implementation in 1996.

• During the 1990s, a new instrument, Sectoral Foreign Trade Companies, was devised in order
to facilitate exports for the small and medium sized companies.

• In 1996, due to the slowdown in the world trade growth, total exports rose by 7.3% but in
1997, as a result of the recovery in world trade, exports increased 13%.

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 • However, in the second half of 1997, an economic crisis in the Southeast Asian economies
took place which also had spillover effects on the rest of the world economy. Turkey wasn’t
immune to these effects especially when the crisis hit Russian economy in 1998, which was
one of the main partners in our foreign trade, Turkey’s economy deteriorated. In 1998,
Turkey’s exports increase rate declined and only 2.7% increase in growth was observed.

• August 1999 earthquake was added to these adverse developments and further shook the
economy. Turkey’s economy shrank by 6.1% and exports were recorded as USD $26.5 billion
decreasing by 1.4%.

• 2000 was also a difficult year for exporters due to the developments in the Euro/dollar parity
against dollar and remarkable increases in per barrel oil prices. Besides, since 2000 was the
first year of the Economic Program, exchange rate policy adopted in line with the Program’s
inflation target also had negative effect on exports. As a result, Turkey’s exports rose by 4.4%
and became USD $27.8 billion. 91.2% of total exports were constituted by manufacturing
goods, 7.1% were agricultural and forestry goods, 1.4% were mining products.

• In 2000, OECD countries were Turkey’s main export markets and had a share of 68.4%,
corresponding to USD $19 billion. Exports to the EU countries recorded as USD $14.5 billion.
Germany was substantially the largest market with the share of 5.1 billion in Turkey’s exports
followed by the US, Italy, th eUK and France.

2001-2003

• Slowdown process beginning with 2001 became more apparent following 9/11 attacks and
world output growth recorded the lowest figure of the last 10 years with 2.4%. However, in
2002 demand in the US and Asian economies recovered and with the expansion of China’s
economic performance, world output grew by 3%.

• In parallel with the development observed in world output, world merchandise exports reached
the level of USD $6.5 trillion growing by 3.9% in 2001 and by 4.2% in 2002. In 2003 world
merchandise trade grew by 16% to USD $7.3 trillion.

• Following the economic crisis in 2001, Turkey’s exports saw a 12.8% increase to reach USD
$31.3 billion. Underlying reasons were the big devaluation that took place due to the
introduction of a “floating exchange rate regime” and companies’ strategy to search for new
markets in light of the shrinking domestic demand. Strong pace of growth in exports continued

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 in 2002 and 2003 respectively by 14.1% and 31%. In 2003, total exports reached USD $47.3
billion and Turkey became the 24th largest economy among the leading exporting economies.

• Main reasons behind this strong export growth in 2003 were the continuous expansion of the
production due to weak domestic demand, decrease in real labor costs, rising productivity,
improving finance opportunities, higher prices of export goods and positive development in
euro/dollar parity.

• In 2003, Turkey realized USD $24 billion exports to the European Union, which constituted
52% of its total exports. Besides, there were positive developments regarding the market
diversification. Exports to the member countries of the Islamic Conference Organization rose
by 40% and reached USD $7.2 billion. Likewise, exports to the Turkish Republics in Central
Asia and member countries of the Economic Cooperation Organization rose respectively by
43% and 48% in the same year.

2004-2007

• In 2004, Turkey’s export earnings reached US $63.1 billion with 33.6% rate of growth while
imports expenses amounted to US $97.5 billion with 40.7% increase. Overall, Turkey’s foreign
trade volume totaled US $160 billion and Turkey became the 22nd country in the world trade
in terms of her export volume.

• The European Union was the leading export market of Turkey having 54.6% share in the total.
Besides, the number of countries that Turkey exported over US $1 billion reached 14 in 2004.

• In terms of sectors; the industrial sector continued to have the largest share in total exports. On
the other hand, the export of agricultural products rose by 24.7% and amounted over to US
$7.5 billion whereas the export of mining products increased 42.5% and reached US $1.2
billion.

• In 2005, total export growth was 16.3% reaching US $73.5 billion while the imports growth
was 19.7% with a value of US $116.8 billion. Accordingly, Turkey’s foreign trade volume
totaled over US $190 billion.

• The European Union had 52.3% of the share of total exports and realized US $38.4 billion
value of imports from Turkey. The number of countries that Turkey exported over US $1
billion reached 15 in 2005.

• In terms of sectors; the industrial sector had the largest share (84.8%) in total exports with a
value of US $61.9 billion and growth rate of 12.7%. On the other hand, the export of

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 agricultural products, which constituted 13.2% of the total, rose by 27.4% and totaled US $9.7
billion while the export of mining products increased 26.3%.

• In 2006, the export growth was 16.3% reaching US $85.5 billion while the imports growth was
18.4% with a value of US $138.3 billion. The exports to the European Union increased 14.4%
and amounted to US $43.9 billion. Moreover, the number of countries that Turkey exported
over US $1 billion reached 19.

• In terms of sectors; the total export of industrial goods increased 17.9%. Regarding agricultural
products, the growth of export was 6.2% and reached US $9.8 billion whereas exports of
mining products increased 36.4%.

• In 2007, Turkey’s export growth was 25.3% amounting to US $107.2 billion with a value over
“the critical threshold” of US $100 billion. On the other hand, imports reached US $170
billion.

• Exports to the European Union rose 26% to US $60.4 billion, and the number of countries that
Turkey exported over US $1 billion climbed to 24.

• In order to overcome the regional dependency in the export markets and to establish the
infrastructure for a sustainable growth in the exports, the Undersecretariat for Foreign Trade
initiated the Strategy of Neighboring and Peripheral Countries” in 2000 and “The Strategy of
African Countries in 2003. Accordingly, Turkey’s exports to this group of countries increased
37.3% reaching US $40.3 billion and by 30.9% reaching US $5.9 billion respectively. In terms
of the country level, Germany was the leading export market for Turkish commodities
constituting 11.2% of total exports with a value of US $12 billion. The second country in
Turkey’s export markets was the United Kingdom to which the growth of exports was 26.6%
and the value of exports was US $8.6 billion. Italy, being the third country, had 7% share in
total exports with a value of US $7.5 billion.

• In terms of sectors; the exports of industrial sector reached US $91.8 billion with an increase of
24.3%. Due to the high share of industrial sector in total exports, its rate of growth has been
determining in the growth of Turkey’s total exports. Regarding agricultural products, their
exports rose by 16.3% and reached US $11.4 billion whereas the export of mining products
increased 30.5% and amounted to US $2.7 billion.

• In 2008, Turkey has an export level amounting to US $132 billion with a growth rate of 23.1%,
while imports reached US $202 billion.

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• Turkey’s exports to the European Union totalled US $63.4 billion, a 5% increase over 2007
and 48% of Turkey’s total exports in 2008. At the same time, the number of countries that
Turkey exported over US $1 billion to rose to 30 countries.

• Germany was the leading export market for Turkey in 2008, constituting approximately 10%
of total exports with a value of US $13 billion. Next came the United Kingdom with US $8.2
billion in exports, down 5.4% from the previous year. The United Arab Emirates was third
with US $8 billion worth of Turkish commodities, ballooning 146% compared to 2007.

• In terms of sectors, manufacturing exports reached US $104.2 billion, rising 20% in 2008.
Exports of agricultural products rose 17% to reach USD $11.5 billion, while mining products
export rose 34% to US $12.1 billion.

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2009

II - MAIN DEVELOPMENTS IN EXPORTS

Sectoral Breakdown of Turkey's Exports by WTO Definition (Million $)

1990 1995 2000 2006 2007 2008 2009
1- Agricultural Products 3.300 4.555 3.855 8.633 9.769 11.474 11.190
i-Food 2.905 4.239 3.543 7.932 9.007 10.705 10.582
ii-Agricultural Raw Materials 395 316 313 702 762 768 607
2- Mining Products 876 1.003 1.157 6.511 9.005 12.089 7.132
3- Manufactures 8.778 16.064 22.699 69.325 87.007 104.256 78.580
i-Iron and steel 1.490 1.972 1.865 7.239 9.586 16.842 9.081
ii-Chemicals 747 890 1.243 3.923 4.739 6.122 5.293
iii-Other semi-manufactures 672 1.455 2.280 7.583 9.669 12.252 10.405
iv- Machinery and transport equipment 855 2.406 5.740 26.386 34.251 39.147 28.805
v- Textiles 1.440 2.532 3.706 7.585 8.950 9.407 7.733
vi- Clothing 3.331 6.121 6.586 12.052 13.886 13.589 11.556
vii - Other consumer goods 243 687 1.279 4.557 5.926 6.896 5.705
4- Other Products 5 15 63 1.065 1.491 4.209 5.237
TOTAL 12.959 21.637 27.774 85.535 107.272 132.027 102.139

Breaking down exports by sector, we see that in 2009 agricultural products made up
11% of total exports, while mining products made up 7%, and manufacturing accounted for 76.9%.

Sectoral Breakdown of Turkey's Exports by WTO Definition (% Share)

1990 1995 2000 2006 2007 2008 2009
1- Agricultural Products 25.5 21.1 13.9 10.1 9.1 8.7 11.0
i-Food 22.4 19.6 12.8 9.3 8.4 8.1 10.4
ii-Agricultural Raw Materials 3.0 1.5 1.1 0.8 0.7 0.6 0.6
2- Mining Products 6.8 4.6 4.2 7.6 8.4 9.2 7.0
3- Manufactures 67.7 74.2 81.7 81.0 81.1 79.0 76.9
i-Iron and steel 11.5 9.1 6.7 8.5 8.9 12.8 8.9
ii-Chemicals 5.8 4.1 4.5 4.6 4.4 4.6 5.2
iii-Other semi-manufactures 5.2 6.7 8.2 8.9 9.0 9.3 10.2
iv- Machinery and transport equipment 6.6 11.1 20.7 30.8 31.9 29.7 28.2
v- Textiles 11.1 11.7 13.3 8.9 8.3 7.1 7.6
vi- Clothing 25.7 28.3 23.7 14.1 12.9 10.3 11.3
vii - Other consumer goods 1.9 3.2 4.6 5.3 5.5 5.2 5.6
4- Other Products 0.0 0.1 0.2 1.2 1.4 3.2 5.1
TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 100.0

The main change from 1990 to 2009 is the shift from agricultural products to manufactured goods.
Between 1990 and 2009, the average annual rate of increase for exports of agricultural products was
7%, while that of manufactured goods was 12.9%. As a result, the share of manufactured goods rose
9.2 points and the share of agricultural products fell 14.5 points.

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Despite the low long-term growth in agricultural exports, agricultural products showed a spike of
27.8% in 2005. But agricultural exports shrank 2.8% in 2006. In 2007 agricultural products exports
started to accelerate and realized 13.1% growth. This rate reached 17.4% in 2008. But in 2009,
agricultural exports fell slightly by 2.5%.

Turkish agricultural exports are largely based on foods rather than agricultural raw materials. The
main agricultural raw material that Turkey exports is textile fibers, whose exports barely equal 22% of
its imports.

The share of mining products fell from 6.8% in the 1990s to 4.2% in 2000. But mineral exports surged
in the new millennium, and their share of total exports reached 9.2% in 2008 and 7% in 2009.

Manufactured goods exports, which totaled $104 billion in 2008, saw average annual increases of
10.0% in the 1990s and 14.8% between 2000 and 2009. The composition of these exports saw
important changes as well. Exports of textiles and clothing, which had a share of 36.8% in 1990 and
40.0% in 1995, have not kept pace, especially due to the exports of machinery and transportation
equipment, so their share fell to 18.9% in 2009. On the other hand, the share of machinery and
transportation equipment rose from 6.6% to 28.2% between 1990 and 2009. This change in
composition brought Turkey closer to international norms.

The machinery and transportation equipment sector, among others, is worth noting here for its
contributions to the rise in exports of manufactured goods. A total of 51.3% of the exports in this
product group stems from transportation equipment, and 41.6% from automotive products alone in
2009.

In 2008, exports of automotive products, electrical machinery and non-electrical machinery exports
rose by 14.5, 18.2 and 27.6%, and reached 17.8, 7.1 and 6.1 billion dollars, respectively. But in 2009,
they all decreased by 32.9, 12.3 and 23.4% with totals of 11.9, 6.2 and 4.7 billion dollars respectively.

Despite the decline in their share in total exports, textiles and clothing continue to be important
components of Turkish exports. Global competition in the sector has intensified after the removal of
quotas. In 2008, the total of these two sectors remained unchanged, while textile sector exports rose
slightly. But in 2009, textile and clothing exports together fell 16.1% compared to 2008.

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Exports of iron and steel rose by 81% in 2004 parallel to price movements in global markets. The
jump in exports of iron and steel was followed by a slump in 2005, succeeded by another rise of 24.1%
in 2006 and in 2007, with iron and steel exports rising 32.4%. This rate jumped to 75.7% in 2008. But
2009 saw a fall of 46.1% in exports of iron and steel. Chinese demand and supply has become one of
the major factors determining global prices in the sector. China is supplying one-third of global
demand in iron and steel and has become a net exporter despite its growing need for the product.

Breakdown of Exports into Main Sectors

World and Turkey (2008)

100

79.0
80
66.5
60
%
40
22.5
20
8.5 8.7 9.2

0
Agricultural Products Mining Products Manufactures

World Turkey

The above graph shows the makeup of Turkey’s exports in 2008 in comparison to the world.
According to the graph, 8.7% of Turkish exports are agricultural goods, 9.2% are mining products, and
79% are manufactured goods.

The share of agricultural and mining products in Turkish exports fell and the breakdown of exports in
the main sectors resembled those of world over the last 20 years. The share of manufactured goods in
Turkish exports is now higher than the world average, indicating a high level of industrialization. On
the other hand, the share of agricultural products was 0.2 points above the world average in 2008,
which is a natural result of Turkey's geographical advantages in this respect. It should be noted that the
share of mining exports is 40.8% of the world average, resulting from the fact that Turkey is an energy
importing country.

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At least as important as the share of manufactured goods in total exports is the composition of
manufactured goods, which indicates that the share of the traditional industrial sectors (clothing,
textiles, iron and steel) in the exports of manufactured goods is still higher than that of the world.
Turkey stands to have a greater share compared to the world average in automotive products as well.
Although the composition of its manufactured goods exports implies challenges for Turkey, it is also
foreseen that Turkey will keep its export potential in traditional sectors while it expands into more
technology-intensive sectors.

Breakdown of Manufacture Exports

World and Turkey (2008)

20

15

World
% 10 Turkey

0
Iron and Chemicals Office and Automotive Textiles Clothing
steel telecom

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 II-A Exports by Country Groups
Exports by Country Groups (Million $)
1990 1995 2000 2005 2007 2008 2009
1- EU (27) 7,421 12,207 15,664 41,365 60,399 63,390 46,993
Germany 3,064 5,036 5,180 9,455 11,993 12,952 9,791
UK 745 1,136 2,037 5,917 8,627 8,159 5,920
France 737 1,033 1,657 3,806 5,974 6,618 6,210
Spain 199 354 713 3,011 4,580 4,047 2,824
Italy 1,106 1,457 1,789 5,617 7,480 7,819 5,892
Romania 83 302 326 1,785 3,644 3,987 2,215
2- Other Europe (Except EU) 494 2,105 1,855 5,855 10,843 15,678 11,359
Russian Fed. 0 1,238 644 2,377 4,727 6,483 3,202
3- North Africa 646 900 1,087 2,544 4,030 5,850 7,446
4- Other Africa 102 165 285 1,087 1,947 3,212 2,732
5- North America 1,032 1,610 3,309 5,276 4,541 4,802 3,564
USA 968 1,514 3,135 4,911 4,171 4,300 3,225
6- Central America 20 59 167 411 549 829 597
7- South America 25 85 120 274 514 901 678
8- Near And Middle East 1,572 2,176 2,573 10,184 15,081 25,430 19,189
Iran 495 268 236 913 1,441 2,030 2,025
9- Other Asia 780 1,643 1,298 3,029 5,227 7,074 6,704
China 37 67 96 550 1,040 1,437 1,599
10- Australia and New Zealand 29 53 135 271 343 435 360
11- Free Zones 0 0 895 2,973 2,943 3,008 1,957
TOTAL 12,959 21,637 27,775 73,476 107,272 132,027 102,139

II-B Exports by Country Groups (Annual Average % Change)

Exports by Country Groups (Annual Average % Change)
1990-1995 1995-2000 2000-2005 2005-2007 2007-2008 2008-2009
1- EU (27) 10.5 5.1 21.4 20.8 5.0 -25.9
Germany 10.4 0.6 12.8 12.6 8.0 -24.4
UK 8.8 12.4 23.8 20.7 -5.4 -27.4
France 7.0 9.9 18.1 25.3 10.8 -6.2
Spain 12.2 15.0 33.4 23.3 -11.6 -30.2
Italy 5.7 4.2 25.7 15.4 4.5 -24.6
Romania 29.5 1.5 40.5 42.9 9.4 -44.4
2- Other Europe (Except EU) 33.6 -2.5 25.8 36.1 44.6 -27.5
Russian Fed. -12.3 29.8 41.0 37.1 -50.6
3- North Africa 6.9 3.9 18.5 25.8 45.2 27.3
4- Other Africa 10.1 11.6 30.7 33.8 65.0 -15.0
5- North America 9.3 15.5 9.8 -7.2 5.7 -25.8
USA 9.4 15.7 9.4 -7.8 3.1 -25.0
6- Central America 24.2 23.2 19.7 15.6 51.0 -28.0
7- South America 27.7 7.2 17.9 37.0 75.5 -24.8
8- Near And Middle East 6.7 3.4 31.7 21.7 68.6 -24.5
Iran -11.5 -2.5 31.1 25.6 40.8 -0.2
9- Other Asia 16.1 -4.6 18.5 31.4 35.3 -5.2
China 12.6 7.5 41.8 37.5 38.3 11.3
10- Australia and New Zealand 12.8 20.6 14.9 12.5 27.0 -17.3
11- Free Zones 27.1 -0.5 2.2 -34.9
TOTAL 10.8 5.1 21.5 20.8 23.1 -22.6

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The European Union (EU-27) has been the destination for approximately half of Turkey’s total
exports. Among these countries, Germany has been the largest market for Turkish exporters. However,
Turkish exports are not as dependent as they were in 1990s on this specific market. While exports to
Germany were $3 billion in 1990, in 2008 they reached $12.9 billion, and in 2009 totaled $9.8 billion.
On the other hand, some other European countries such as the United Kingdom, Spain and Romania
increased their share of Turkey's total exports.

In addition, exports to non-EU European countries moved at a faster pace than aggregate exports, with
their share of total exports rising from 6.7 to 11.1% in 2000-2009. 28.2% of exports to the region in
2009 were destined for the Russian Federation. Although exports to the Russian Federation fell during
the 1998 economic crisis, the Russian Federation's share of Turkish exports has risen since 2000.

Exports to Africa are mainly directed towards northern African countries. Free trade agreements
signed with Morocco, Tunisia and Egypt are set to further boost Turkish exports to North Africa. In
2008, exports to North Africa rose 45.2% and 27.3% in 2009.

The share of other African countries in total exports also rose. This can be attributed to the regional
strategy Turkey put into effect in 2003 to promote trade and economic relations.

Exports to North American countries and especially to the US rose from 1995 to 2000, but lost pace
during the 2000s. Exports to the US rose only 3.1% in 2008, and decreased by 25% in 2009.

The Near and Middle East has been an important export destination for Turkey for a number of
reasons, such as geographical proximity, cultural links, and complementary needs. Exports to the
region performed particularly well during the period from 2000 to 2008. Exports to the region in 2008
had a 69.1% rate of increase, but fell 24.5% in 2009.

Exports to the other Asian (Far Eastern) countries rose fast after 2000, particularly in the last three
years. The region constituted 6.6% of total exports in 2009, with Kazakhstan and China making up a
large part of this share.

Free zones, which provide vital financial, warehousing and distribution facilities to firms, performed
well in terms of increases in the 2000s. However, exports to free zones fell by 1.0% in 2007 before

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seeing a 2.2% increase in 2008. This slowdown in performance is attributable to changes in legal and
fiscal arrangements relating to the zones. In 2009, exports to free zones fell 35%.

III- DEVELOPMENTS IN IMPORTS

Breakdown of Turkey's Imports by Broad Economic Categories (BEC) (Million $)

Breakdown of Turkey's Imports by Broad Economic Categories (BEC) (Million $)
1990 1995 2000 2005 2007 2008 2009
Investment Goods 4,041 8,119 11,365 20,363 27,054 28,021 21,442
Intermediate Goods 16,116 25,037 36,010 81,868 123,640 151,747 99,402
Consumption Goods 2,114 2,456 6,928 13,975 18,694 21,489 19,261
Others 32 95 199 567 675 707 671
Total Imports 22,302 35,708 54,503 116,774 170,063 201,964 140,775

Annual % Change in the Breakdown of Turkish Imports

Annual Average % Change in the Breakdown of Turkey's Imports
1990-1995 1995-2000 2000-2005 2005-2007 2007-2008 2008-2009
Investment Goods 15.0 7.0 12.4 15.3 3.6 -23.5
Intermediate Goods 9.2 7.5 17.9 22.9 22.7 -34.5
Consumption Goods 3.0 23.1 15.1 15.7 15.0 -10.4
Others 24.3 16.0 23.3 9.0 4.7 -5.0
Total Imports 9.9 8.8 16.5 20.7 18.8 -30.3

Sectoral Shares of Turkey’s Imports (%)

Sectoral Shares of Turkey's Imports (%)
1990 1995 2000 2005 2007 2008 2009
Investment Goods 18.1 22.7 20.9 17.4 15.9 13.9 15.2
Intermediate Goods 72.3 70.1 66.1 70.1 72.7 75.1 70.6
Consumption Goods 9.5 6.9 12.7 12.0 11.0 10.6 13.7
Others 0.1 0.3 0.4 0.5 0.4 0.3 0.5
Total Imports 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Conventionally, imports of intermediate goods, which fluctuate in line to Turkey’s economic growth,
constitute approximately 70-75% of total imports. The share of intermediate goods declines in periods
when consumption of final products accelerates.

Although the economy has been growing in recent years, growth in final consumption has not been so
strong to bring the share of consumption goods up to the level of 2000. Growth is becoming even more

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dependent on production rather than consumption, which has recently reduced the share of
consumption goods in imports. The breakdown of import progress in a desired path for a country that
is implementing a program is to keep the price level down and increase production.

III-A Imports by Country Groups

Imports by Country Groups (Million $)

Imports by Country Groups (Million $)
1990 1995 2000 2005 2007 2008 2009
1- EU (27) 10,454 18,025 28,527 52,696 68,612 74,802 56,571
Germany 3,497 5,548 7,198 13,634 17,540 18,687 14,096
UK 1,014 1,830 2,748 4,696 5,477 5,324 3,467
France 1,340 1,996 3,532 5,888 7,850 9,022 7,090
Spain 345 591 1,678 3,555 4,343 4,548 3,776
Italy 1,727 3,193 4,333 7,566 9,968 11,012 7,673
Romania 202 368 674 2,286 3,113 3,548 2,258
2- Other Europe (Except EU) 608 3,937 6,149 20,386 34,254 44,196 26,154
Russian Fed. 0 2,082 3,887 12,906 23,508 31,364 19,719
3- North Africa 938 1,143 2,257 4,212 3,616 5,267 3,541
4- Other Africa 400 242 457 1,835 3,168 2,503 2,157
5- North America 2,464 4,017 4,167 5,823 9,033 13,404 9,509
USA 2,282 3,724 3,911 5,376 8,166 11,976 8,572
6- Central America 48 133 80 287 448 560 476
7- South America 504 574 551 1,747 2,671 3,260 2,286
8- Near And Middle East 2,517 2,717 3,373 7,967 12,641 17,628 9,594
Iran 492 689 816 3,470 6,615 8,200 3,406
9- Other Asia 2,356 4,219 6,933 20,581 33,658 38,087 28,835
China 246 539 1,345 6,885 13,234 15,658 12,663
10- Australia and New Zealand 147 342 305 321 672 876 648
11- Free Zones 0 0 496 760 1,224 1,334 965
TOTAL 22,302 35,708 54,503 116,774 170,063 201,964 140,869

European countries have a crucial share approaching 60% in Turkish imports, largely due to their
geographical proximity to Turkey, their level of economic development, and the Customs Union with
the EU.

The share of the EU in imports is 40%, which is quite high compared to other country groups but
lower than the share of the EU in exports. The pace of imports from the EU was faster than the pace of
total imports in the 1990s but slower since 2000.

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Germany is the largest source of Turkish imports in the EU, but in 2006 among all countries the
Russian Federation became the largest supplier of Turkey. The rise in energy prices caused imports
from the Russian Federation and Iran to jump, so that imports from the Russian Federation rose 82.1%
and 33.4% and imports from Iran rose 90.6% and 24.0% in 2007 and 2008, respectively. But in 2009,
imports from Russian Federation fell 37% and imports from Iran fell 58.5% compared to 2008.

North America had a share of 11% in Turkish imports in 1990 but its share fell to 6.8% in 2009. This
decline was particularly marked in imports of food, office machines and telecommunications
equipment, railway and tramway locomotives, and ships and other floating structures. However,
imports of various products, such as textile fibers, metalliferous ores and metal scrap, pharmaceutical
products and professional, scientific and controlling instruments, rose over the last decade.

The share of the Near and Middle Eastern countries in total imports fell until recently. Imports from
the region rose from $10.5 billion in 2006 to $17.6 billion in 2008, but fell to $9.6 billion in 2009.

Imports from North African countries are mainly mining products and mostly depend on the share of
these countries in Turkish energy imports. Although energy imports have risen in recent years, North
African countries had a minor role in this increase compared to the Russian Federation and Iran.

In brief, Turkey’s foreign trade has developed enormously in terms of quantity and quality since the
1980s. Export performance has been spectacular especially over the last six years. In 2009, decreases
in both exports and imports were seen, which can be attributed to the current global financial crisis
whose effects were acutely felt last year. Turkey has been implementing new strategies to ensure the
sustainability of these developments and to diversify its exports and imports further on a regional and
sectoral basis. Turkey's goal is to exceed $500 billion in exports by the centenary of the Republic.

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