Recent developments did not alter the 4 percent growth forecast for 2013.

Foreign trade figures for 2012 were released on Thursday. In line with the global circumstances, export growth weakened significantly overall in 2012. Non-gold exports increased only by 4.3 percent in 2012 against 17 percent average growth over the 2010-11 period.

On the other hand, quarterly statistics reveal a remarkable recovery in non-gold export growth in the last quarter of the year. Year-on-year growth rates of non-gold exports were 9.3 percent, 3 percent and minus 1 percent in the first three quarters of 2012, respectively. In the last quarter of the year, year-on-year growth rate was 6.3 percent. This implies a relative recovery in export performance compared to the second and the third quarters if not to the first.

Competitiveness has weakened

Yet, we should not be expecting a magic wand to boost Turkey’s exports in 2013. The two key determinants of export performance are not promising. First, due to the perception across financial markets that the worst days are over, abundant short term funds will flow towards Turkey and peer countries that offer high returns. Rising FX supply puts a downward pressure on the exchange rate. This, coupled with its inflation rate higher than its rivals, has been weakening Turkey’s competitiveness. The Central Bank has stated that it will do its utmost to prevent appreciation of the lira in real terms. Yet, the mentioned acceleration in fund inflows does not augur well for the export performance. Second, Turkey’s export markets were expected to grow at a limited degree in 2013. In January, the IMF revised down the growth forecasts, however. Even though the estimates were lowered only slightly, any revision downwards is a bad sign for Turkey’s export performance. Hence, we should expect only a marginal increase in non-gold exports in 2013.

Limited recovery in the fourth quarter

Non-gold and non-energy export figures also back up my estimation for fourth quarter’s growth rate. The figures decreased year-on-year throughout the first three quarters and decreased only by 0.3 percent in the fourth quarter, compared to 6.7 percent which was the second mildest drop of the year.

If we assess other common indicators addressed at this column together with the export and import figures above, we see that the third quarter was the worst of 2012 while the fourth quarter witnessed only a mild recovery. Within this framework, we can expect year-end growth rate to be around 2.6 percent. Before the new year, I presented my forecasts for 2013 together with my basic assumptions. Major developments have arisen since the series on 2013 was published. In another commentary, I will investigate to what degree these developments match with my base scenario. But in a nutshell, these developments did not alter the 4 percent growth forecast for 2013.

This commentary was published in Radikal daily on 02.02.2013