According to data from the Turkish Statistics Institute, the inflation rate in October 2021 rose to 19.89% year-on-year, setting a 2.5-year high. High inflation has led to sluggish domestic demand, a weak lira has led to high import costs, high energy costs and reduced investment. These factors will affect the manufacturing and exports of Turkey’s textile and apparel industry.
SuasdfssdfstIdil, representing Turkey’s Fibre2Fasdfssdfsshion, said: Nearly 20% of the annual inflation rate is driven by food, services, housing, and transportation prices, and consumers have almost no money to satisfy them. their clothing needs. As a result, people delay and purchase only the minimum amount of textiles required to meet their daily needs. The decline in domestic demand will definitely affect the manufacturing industry as textile and apparel companies will reduce production.
High inflation is accompanied by currency devaluation. Turkey’s currency, the lira, has lost about 25% of its value since the start of 2021 and trades at 10.37 against the US dollar today. Idil explained: This helps textile exporters make more money now. In fact, raising inflation and lowering interest rates, thereby weakening the currency, is the government’s strategy to promote exports. But as market prices rise crazily, this puts huge pressure on people. Textile exporters may like this in the short term, but it can also adversely affect them when it comes to importing raw materials from abroad.
Turkish clothing exports increased by 25.72% to US$13.364 billion from January to September 2021, while exports in the same period in 2020 were US$10.630 billion. However, its imports of cotton, cotton yarn and cotton textiles (HS Chapter 52) increased significantly, growing 34.2% year-on-year to US$2.553 billion during the same period, according to data from the Turkish Statistics Institute and the Ministry of Trade.
Meanwhile, the government will supply natural gas to the industry this month as surging global prices push up import bills, on top of the high cost of fuel and other imported products. The price increased by 48%. As one of Europe’s largest natural gas importers, Turkey relies on pipeline natural gas from Russia, Azerbaijan, and Iran, as well as liquefied natural gas (LNG) imported from Nigeria, Algeria, and the spot market.
Idil said: Due to the current situation, new investments in the country’s manufacturing industry, especially from domestic companies, will drop sharply. People have started shifting their savings into gold and foreign currencies.
An anonymous European retail buyer informed: Ironically, this comes at a time when the West is actively promoting ‘neasdfssdfsr-shasdfssdfsring’ and ‘ China+1 (Chinasdfssdfs+1)’ strategic occasion.
According to Turkish economists, one of the main reasons for the current high inflation and currency weakness is the government’s insistence on low interest rates. They believe this could have more side effects next year and could even spread into 2023. </p
