Weekly Hurriyet column: Arab spring, Turkish fall
Below is my Hurriyet Daily News column for this week, which you can also read at the Daily News website. I will have an addendum at the blog later today, as usual, but before that, I should say that I am proud of my wordplay in the title, i.e. the Arabs “spring” and the Turks “fall”, and also of course the seasons. But as you’ll see, the Turks are not really falling, as emphasized by my last sentence. Speaking of that last sentence, there is also a small wordplay there, i.e. the Turkish fall having an Indian summer…
I also love my third graph; it just looks nice and …well… symmetric:)
Anyway, on to the column:
It has been exactly six months since Mohamed Bouazizi, a Tunisian street vendor, died on Jan. 4, after setting himself on fire more than two weeks earlier.
When the unrest spread to Libya and Egypt in February, most Turkey analysts, including your friendly neighborhood economist, claimed that despite fears to the contrary, the Turkish economy was not exposed.
After all, although over one-fourth of Turkey’s exports were directed at Middle East and North Africa, or MENA, last year, the countries in turmoil accounted for less than 5 percent of the total. Besides, the chaos was short-lived in Egypt and Tunisia. As a result, after falling sharply during the protests, exports have recovered since then. Trade to Libya, on the other hand, has unsurprisingly collapsed.
Even oil prices, the main cause for concern of many, have retreated: After hitting a high of $126.5 per barrel early April, Brent oil is now hovering around $110. Following the International Energy Agency’s decision to release 60 million barrels of reserves, oil analysts have revised their end-year and average oil price forecasts, which is good news for Turkey’s current account deficit and inflation.
But recent developments have shown that Turkey economists were nevertheless overoptimistic. For one thing, the protests have spread to Syria, which is one of Turkey’s main export markets in the region, with several other countries seeing their share of protests as well.
Syria accounts for around 1.5 percent of Turkey’s total exports, but for once the trees are as important as the forest itself: Some of the countries in turmoil have been an integral part of the Turkish efforts to diversify the country’s export markets.
It is true that Turkey is still, although to a lesser degree than before, largely dependent on European markets for exports. But MENA’s share has increased in the last few years, with the cities in Southeastern Turkey having benefited the most. Registered employment in the region actually rose on a yearly basis during the first half of 2009, when the economic contraction was the deepest. Some of this could be due to the firms’ ability to increase their exports to their neighbors south of the border.
Moreover, the impact on Turkish companies could be more than as revealed by statistics. In a recent survey conducted by Grant Thornton, a firm offering audit, tax and advisory services, 53 percent of Turkish companies stated that the impact of the unrest on their business was negative. That is by far the highest figure of the 39 countries in the survey.
I am skeptical of cross-country opinion surveys simply because some nations are more pessimistic than others. But interestingly enough, 11 percent of the Turkish respondents say the turmoil has had a positive impact on their business, right behind United Arab Emirates and Hong Kong.
The crisis may have indeed opened up new opportunities for Turkish firms, as they may have grabbed some business from the countries in turmoil. It is noteworthy that Jordan’s imports from Syria have plunged in the last couple of months, while those from Turkey have surged.
With some government support, the Arab spring may well lead to a Turkish summer.
Emre Deliveli is a freelance consultant and contributor to Roubini Global Economics. Follow his blog at http://www.economonitor.com/emredeliveli/.
5 Responses to “Weekly Hurriyet column: Arab spring, Turkish fall”
balyoz • July 5th, 2011 at 2:08 pm
It is not that original, your title I mean. Very recently used by Shlomo Ben Ami. http://www.project-syndicate.org/commentary/benam…
Or is it a pure coincidence?
Yeah, selling detergents (mostly Arap sabunu I suspect), chewing gum and biscuits to MENA instead of industrialized goods to EU will lead to a Turkish summer, sure!
edeliveli • July 5th, 2011 at 2:26 pm
I kind of liked my title, but not everyone has to agree with me, I suppose:) But I've never read Project Syndicate (although I do get their Tweets, I think) with the exception of a couple of articles by Dani Rodrik and Jeffrey Sachs some time ago, so I would say it is a coincidence (rather than I plagiarized)- there is nothing wrong with using someone else's title, and I have done that a couple of times in the past, but I always give the credit. Besides, I submitted my article to my editor on Friday, around the same time as the publication of the P.S. article, so even though that author may have thought of it before me, I should be exonerated:)
Anyway, as I say in the article, regardless of the content of the exports, exports to MENA will not make a big difference for Turkey's overall trade; the numbers are way too small. But that is no reason to disregard them. There is semi-hard evidence that the increase in exports to MENA have made/ are making a big difference at the margin, especially for firms in Southeastern Turkey. And diversification away from the EU does not hurt, even if it by only a few percentage points…
BTW, I would not make too much into the sectoral contents of Turkey's exports: All of those industrial goods exported to the EU have quite a large content of intermediate inputs so that their effective contribution to exports and value added are not as large.
Best,
Emre
edeliveli • July 5th, 2011 at 2:29 pm
Sorry, in the last paragraph, I meant "intermediate inputs imported". So to export 100, you have to import 80 (I am making the numbers up, but a CBT paper has the actual numbers)….
reziemba • July 5th, 2011 at 3:37 pm
Hi Emre. I've enjoyed your blog for a while – and really enjoyed this one. Do you think that including also services would have a greater effect given the construction exports?
Rachel
edeliveli • July 5th, 2011 at 8:18 pm
Hi Rachel. Thanks for the kind words. Yes, definitely, for example, the biggest Turkish businesses in Jordan are in mega construction projects… but that data is more difficult to get on a regional basis; the Undersecretariat of Trade has it, but you have to search your way for it:)
