VDMA notes 'significant' decline in machinery exports to Turkey

Frankfurt am Main, Germany – German rubber and plastics machinery deliveries to Turkey fell by 4.5% in the first five months of the year, compared to the same period last year, reported the German machinery trade association, VDMA.

Overall machinery sales from Germany, including plastics and rubber, were down 4.7%. The year-on-year decline made Turkey's economic difficulties "more and more obvious."

And VDMA expects the negative trend to continue in the coming months as the Turkish lira has fallen significantly against the euro, mainly as a result of Washington’s sanctions and punitive tariffs levied on the country.

In July 2018, 1 lira was still worth €0.18 on average. In 2017 it was €0.24 on average and in the year before it was €0.30.

"This makes imports considerably more expensive for Turkish customers. However, the weak lira exchange rate is also a great burden for all those companies that have taken out loans in foreign currency," said VDMA chief economist Ralph Wiechers.

According to VDMA, the general conditions remain difficult for the Turkish manufacturing industry, despite a slight recovery after the July elections.

However, the purchasing managers' index remained below the threshold of 50 points at 49 index points in July, having recovered from 46.8 points in June.

The low index signals a possible contraction in economic performance, VDMA added.

While production and new orders in manufacturing declined, export orders increased for the first time in three months, with the weaker lira improving the price competitiveness of Turkish exports. However, this advantage is partly eroded by the fact that numerous preliminary products have to be purchased increasingly expensively from abroad.

With a market volume of around €29 billion, Turkey is the twelfth largest machinery market worldwide.

Just over a third of the machines sold in the market are manufactured domestically. Germany is the most important foreign machine supplier in Turkey with a market share of 13%, followed by China at 10, Italy at 9%, the UK and Japan with each having a 4% share.

Turkey is the 14th export destination for German machinery, with €3.7 billion of exports to the country in 2017.