We continue to our journey: today we will examine the changes in export volume during the 2001 crisis and the global crisis. Commenting on the past developments is neither the only nor the most important purpose here. The main purpose is to have a hint about the prospective developments. Let us see whether we can make forecasts at the end of our adventure.

Today I will focus not only on export of goods; I will take export of goods and services as involved in gross domestic product (GDP) accounts; in a way the sum of Turkey's foreign exchange earnings. Another difference is that the figures I will use are real data net of exchange rate movements.

The first graph gives the export volumes between the peak of the GDP before the 2001 crisis (last quarter of 2000) and the time when the peak was re-achieved after the crisis (first three quarters of 2003). The same graph also gives the normalized GDP movements where the peak level at the end of 2000 corresponds to 100. Export data is also normalized with a similar method. Graph 2 gives the movements in the two variables during the global crisis. The peak level of GDP before the crisis is achieved in the first quarter of 2008. The bold lines give the GDP and dotted lines give the export volume in each graph. Level of foreign funds is measures in the right axis. '0' in the horizontal axis correspond to the peak GDP level. The meaning of other numbers is also clear. For instance, the number '2' show two quarters after the peak of the GDP.

But this time, we observe two different movements. Yesterday's graphs on the net foreign funds received by banks and firms did not differ much between the two crises. However, export volumes differ significantly. In the 2001, while GDP dropped rapidly export volume never fell below the peak level before the crisis. In fact, export volume increased continuously except for one quarter. Given that the foreign funds as well as domestic funds came to halt in that period, it becomes evident that it was the rise in exports that carried the economy through.

However, in the global crisis exports dropped rapidly along with the GDP. In fact reduction in exports was in a way one of the main reasons for the fall in the GDP. Another striking point concerning the movements during the global crisis is the fact that export volume still fluctuates far below the peak level before the crisis.

The message this short analysis gives is clear: The improvements in the purchasing power of countries who receive Turkey's goods and services exports are of great importance for production gains. In this context, it will be in Turkey's benefit if the EU countries recover rapidly. Nonetheless we all know and watch the developments around Europe; they are still busy with 'pretending' to save Greece. In that case, Turkey's capacity to diversify export markets in the coming period will be of critical importance. The analysis here gives us clues for a healthier assessment on prospective developments: we have to focus on the progress in market diversification.    

Graph 1: Export of goods and services and GDP in 2001 (crisis 4^th quarter of 2000 - 3^rd quarter of 2003)

Graph 2:Export of goods and services and GDP in the global crisis (1^st quarter of 2008 - 1^st quarter of 2010)

This commentary was published in Radikal daily on 19.04.2010