Turkey, carrying its economic difficulties into the new year, is trying to overcome the instability in its macroeconomic balance through exports. Turkey, one of the two fastest-growing countries in Europe, is recording a relative decrease in inflation and interest rates. However, while industrial growth rates are declining, the decrease in the manufacturing industry, in particular, stands out. It is vital for Turkish industrialists that decision-makers act immediately to solve their problems. The contraction in the manufacturing industry and high inflation emerge as areas that need to be carefully monitored for economic stability.
Ömer KARADENİZ
PLASFED
Chairman of the Board
The Turkish economy experienced significant developments in 2024, recording remarkable changes in various economic indicators. Particularly affected by geopolitical uncertainties, leading to instability in its macroeconomic balance, the Turkish economy tried to overcome these difficulties through exports.
Our country, which achieved 262 billion dollars in exports during the January-December period of 2024, proudly set a new record. According to data from the Turkish Exporters Assembly, the second-largest exporting sector was chemicals, with 30.8 billion dollars. Within the chemical substances and products group, the biggest support came from plastics and their products. According to the data, the sector's total 12-month export figure was recorded as approximately 9.5 billion dollars.
The sector maintained its position as the top exporter within total chemical substances in 2024 with a 30 percent share. According to TÜİK data, plastic product exports were 7 billion dollars in 2024, and raw material exports were 2.6 billion dollars. The sector's product imports were 3.5 billion dollars in 2024, and raw material imports were 11.5 billion dollars.
All these data show that disrupted macroeconomic imbalances can be rectified by an increase in exports. Opening the way for exporters is vital for strengthening the Turkish economy. The only way to effectively combat inflation without cooling down the economy is through exports. Turkish exports need to be supported, and all instruments in this regard must be put into action.
TURKEY GREW BY 3.2 PERCENT
The Turkish economy grew by 3.2 percent in 2024. According to the chained volume index, the Turkish economy recorded growth of 3 percent year-on-year in the last quarter of 2024 and 3.2 percent overall in 2024, exceeding market expectations. However, growth primarily depended on the pace of the construction sector. Unfortunately, industrial growth remained at 0.5 percent. When looking at the growth in the manufacturing industry, it is evident that the main problem lies there. Far from growing, the manufacturing industry actually contracted by 0.2 percent.
MANUFACTURING INDUSTRY WEAKENS
When we look at the manufacturing sector's Purchasing Managers' Index (PMI) in February 2025, we observe that it remained below the 50 threshold at 48.3, indicating a continued contraction in the sector.
This decline in the manufacturing industry is quite alarming. The fact that PMI data has consistently remained below the threshold for 11 months and has now fallen even lower than the previous month indicates the difficulties faced by industrialists. As we always say, there can be no development without production. We expect decision-makers to act immediately to solve the problems of industrialists. The contraction in the manufacturing sector and high inflation rate stand out as areas that need to be carefully monitored for economic stability.
INTEREST RATES ARE FALLING
Interest rate cuts are gradually decreasing as part of the fight against inflation.
The Central Bank continued its interest rate reduction process in 2025, which began in December 2024. In December, January, and March, it lowered the policy rate by a total of 750 basis points, from 50 percent to 42.5 percent. Projections suggest that the Central Bank could reduce the policy rate to 28.5 percent by the end of 2025. Consequently, we also expect interest rates to fall in 2025. In a high-interest rate environment, the scope for action for industrialists narrows. We believe that access to low-interest financing must be made available for industrialists who struggle to access funding.
INFLATION AT ITS LOWEST LEVEL IN 20 MONTHS
As of February 2025, the annual inflation rate dropped to 39.1 percent, reaching its lowest level in the last 20 months. We expect this decrease in inflation to be permanent. We find the steps taken to combat inflation and ensure macroeconomic stabilization encouraging, even if not at the desired level. As a result of the measures taken, there are reductions in the country's risk premium, especially in terms of decreasing external vulnerabilities. When looking at the 12-month inflation data, even if due to base effect, a slight decrease gives hope to us industrialists. However, a permanent and effective reduction in inflation is vitally important for Turkish industrialists to be able to plan ahead.
INDUSTRIALISTS STRUGGLE TO ACCESS FINANCE
Access to finance in Turkey is becoming increasingly difficult every day. The rising cost of financing is being watched with concern by companies. Our industrialists are looking for ways to cope with difficulties in accessing finance due to increasing raw material and energy costs. Unfortunately, Turkish industrialists are struggling to find sufficient support in terms of access to finance.
Unfortunately, Turkish industrialists facing capital shortages have reached a point where they have to reduce production. If the difficulties continue, the danger to industrial production will increase. Businesses with rapidly eroding profit margins are awaiting credit support to meet their capital needs and continue production. Our industry, especially the plastics sector, which is dependent on foreign raw materials and wishes to continue production and employment, expects support in accessing finance.
This content has been translated using artificial intelligence technology.