TİM Report: Costs Emerge as the Most Critical Challenge to Competitiveness
The Türkiye Exporters Assembly (TİM), in collaboration with PwC Türkiye, unveiled its report titled “Enhancing Export Competitiveness.” Examining the competitive strength of nine sectors, the report highlights how mounting cost pressures are exacerbating market share losses and outlines 189 policy measures to bolster competitiveness.
The report titled “Enhancing Export Competitiveness,” prepared by TİM in collaboration with PwC Türkiye, was presented to the press and the public by Mustafa Gültepe. Gültepe stated that the report scrutinized nine manufacturing sectors: automotive, chemicals, machinery, electrical and electronics, textiles, ready-to-wear apparel, steel, non-ferrous metals, and furniture.
“We are unable to translate our production capacity into global competitiveness”
Highlighting that the sectors examined accounted for approximately 70 percent of total exports in 2025, generating $166 billion in export revenues, Gültepe continued:
“This report was not prepared behind a desk but through extensive fieldwork. We evaluated more than 200 product groups across nine sectors. We organized dedicated workshops for each sector. We conducted comparative analyses using data from more than 20 competing countries. We identified our strengths and weaknesses in costs, productivity and technological capabilities, logistics infrastructure, incentives, human resources, and industrial and trade policies. We are well-positioned across many of these parameters. Our production capacity remains exceptionally strong. We possess extensive export experience. We enjoy geographical proximity to Europe and the Middle East. We have flexible manufacturing capabilities and can ensure rapid delivery. We also maintain certain advantages in logistics and freight costs. Nevertheless, despite these strengths, we are unable to translate our production capacity into global competitiveness. This is because, as we have repeatedly emphasized for years, costs lie at the very heart of the problem. The report clearly identifies the underlying causes of this challenge from an independent perspective.”
“While cost structures remained stable in competing countries, they deteriorated in Türkiye”
Mustafa Gültepe underscored that labor, energy, financing, raw material, and logistics costs in Türkiye have increased significantly faster than in competing countries. Noting that Türkiye's average annual inflation rate stood at approximately 38 percent between 2019 and 2025, Gültepe continued:
“Average inflation remained in single digits across all the competing countries included in our comparative analysis. Not a single country recorded an average inflation rate exceeding 8 percent. This divergence translated directly into additional costs for exporters. Since 2019, the minimum wage has increased by 1,290 percent, raw material and intermediate goods prices by 1,250 percent, and energy prices by 1,490 percent. Over the same period, however, the US dollar exchange rate increased by only 860 percent. Because the exchange rate did not rise at the same pace, energy prices increased by 74 percent in dollar terms, the minimum wage by 51 percent, and overall costs by 55 percent. For instance, the dollar-denominated production cost of a machinery product in our country has risen by 60 percent compared with 2022. The corresponding increases were 58 percent in ready-to-wear apparel and 55 percent in furniture. While cost structures remained relatively stable in competing countries, they deteriorated in Türkiye. Across every sector we examined, our cost structure and the macroeconomic divergence between Türkiye and competing countries emerged as major challenges. The weakening of our pricing competitiveness has consequently resulted in market share losses. Our share of global exports declined from 1.08 percent to 0.98 percent over two years. These market losses have also affected production capacity and employment. The number of insured employees in the manufacturing industry has fallen by 480,000 over the past four years. For years, we distinguished ourselves as a country offering an attractive price-performance proposition, delivering high-quality products at reasonable prices with rapid turnaround times. The report indicates that this balance is now under pressure from both directions. While low-cost Asian manufacturers exert downward pressure on prices, our European competitors are challenging us in the very same markets. Poland, for instance, emerges as a competitor in seven of the nine sectors. The findings came as no surprise to us. The challenges we have been highlighting from our firsthand experience in the field for years have now been substantiated by data from an independent study.”
“If we cannot compete today, we cannot invest in tomorrow”
Mustafa Gültepe emphasized that the challenges surrounding competitiveness also have profound implications for the future of exports. Stressing the need to allocate greater resources to technology, research and development (R&D), innovation, the twin transition, design, and branding to maintain a strong position in global trade, Gültepe stated:
“Price competitiveness is the prerequisite for transformation. Before exporters can invest in all these areas, they must first establish a strong position in their markets. A company losing market share cannot allocate resources to transformation. If we cannot compete today, we cannot invest in tomorrow. The erosion of price competitiveness in recent years risks becoming a strategic challenge for the future of exports. We therefore need policies that prioritize competitiveness. Serving as a roadmap for restoring our competitive strength, the report proposes 189 policy measures for the nine sectors. It also includes specific recommendations tailored to individual sectors. Establishing a lasting presence in target markets, structuring support mechanisms around added value and performance, providing greater support for R&D, product development and innovation, and modernizing the Customs Union with the European Union (EU) emerge as shared priorities across all sectors.”
Mustafa Gültepe concluded by expressing his confidence in Türkiye's production potential and its extensive export community of more than 160,000 members, adding that if the competitive conditions prevailing four years ago were restored, the country could advance confidently toward its medium- and long-term objectives with double-digit annual export growth.