Costs and Exchange Rates Must Be Balanced

We closed July's exports with a 13.8% increase. While this double-digit growth may seem promising at first glance, it would be misleading to claim that things are going smoothly this year. We must not forget that the 13.8% increase is largely due to the two additional working days compared to the same month last year.

Despite being up by 4.1% in the seven-month period covering January to July and 3.4% in the past 12 months, we remain below our target. The slow growth in global demand and the uncertainties arising from conflicts around us have undoubtedly contributed to this shortfall. However, it is crucial to emphasize that developments stemming from the domestic context have played a far more significant role in slowing our momentum.

In Türkiye, production costs have surged by at least 100% annually, with some sectors experiencing increases as high as 120%. During the same period, the rise in the dollar exchange rate was only 23%. We are now 40-50% more expensive than our Asian competitors in dollar terms, and 15-20% more costly compared to certain European countries. The data clearly illustrate the situation: Türkiye is no longer just expensive—it is very expensive. Consequently, as we struggle to set competitive prices in many sectors, our competitiveness is declining, and we are falling out of the game. Our companies are compelled to take orders at cost, or even at a loss, just to keep the wheels turning and avoid losing customers. Obviously, this is not sustainable. The fact that the number of companies declaring bankruptcy in the first five months of this year has already matched the total for 2023 is a clear indication that something is amiss.

We cannot say that the current situation aligns with Türkiye's strategy of economic growth through exports. To regain momentum in exports, which are the driving force of our economy, balancing input costs with the exchange rate appears to be the only viable solution.

We recognize that our economic management is waging a tough battle against inflation. However, it is crucial not to block the channels through which exporters can breathe during this struggle. We must not forget that the slowing of exports during a time when the domestic market is beginning to contract will have negative repercussions on production and employment. Therefore, I believe that the necessary steps will be taken before exporters fall further out of the game.

I extend my heartfelt thanks to our exporters, who continue to work with great sacrifice despite all the adverse conditions. 

I firmly believe that, with the spirit of unity and solidarity, our nation will continue to achieve victory after victory in all areas, including the economy. On this occasion, I celebrate the 102nd anniversary of our 30th August Victory Day, a symbol of our nation's unparalleled struggle for independence and freedom. I pay my respects and gratitude to our venerable martyrs, particularly Gazi Mustafa Kemal Atatürk and his comrades-in-arms, who sacrificed their lives. This great victory is the finest testament to what the Turkish nation can achieve when united.

Happy Victory Day to all our people!