TİM President Warns of Financing Squeeze: Competitiveness Eroding Despite Record Exports

While Turkey's foreign trade data for July points to near-record export volumes, it reveals a stark reality: local manufacturers are rapidly losing their global competitiveness due to soaring production costs and severe bottlenecks in accessing affordable finance.

Structural Erosion Behind the Record Export Figures

Mustafa Gültepe, President of the Turkish Exporters Assembly (TİM), announced that July exports reached $25.6 billion—the second-highest monthly volume in history—but cautioned that this growth should not mask deep-rooted structural crises. Having battled high costs for three consecutive years, key industrial sectors are experiencing a decline in competitiveness and a failure to democratize export growth across the wider business base.

■Total exports for the first 7 months reached $161.6 billion, while the 12-month rolling export volume neared $279 billion.

■While 47 provinces increased their exports, 1,108 first-time exporting companies contributed $166 million to the total volume.

■Parity headwinds continued to drag down performance in July, shaving off approximately $290 million from the headline export figure.

The Financing Squeeze and Bottlenecks in Rediscount Credits

Macroprudential measures, shaped by high inflation and tight monetary policy, are severely restricting exporters' access to low-cost financing. With market borrowing costs starting at 45-50 percent, the real sector is heavily relying on Central Bank-backed credit channels, creating unprecedented demand pressures.

■Despite the Central Bank of the Republic of Turkey (CBRT) raising the rediscount credit limit to 5 billion TRY, excessive congestion in this channel limits its accessibility.

■The 6-month extension of the 3 percent foreign exchange conversion support provides temporary relief but falls short of solving the broader working capital deficit.

■The threat of “premature deindustrialization” grows as high borrowing costs and shrinking commercial credit growth rates squeeze industrial output.

Rising Global Protectionism and Contraction in Locomotive Sectors

The rapid retreat from free trade principles globally and the rise of tariff walls are compounding the challenges for Turkish exporters. The contraction in key locomotive sectors during July serves as a warning sign of this mounting external pressure.

■The automotive sector, Turkey's leading export driver, contracted by 6.5 percent in July to $3.6 billion.

■The chemicals sector dropped by 11.4 percent, falling to $3 billion.

■According to IMF and World Bank data, interventions in global trade and protectionist tariffs have reached historic highs, driven by recent tariff hikes in major economies like the US.

The sharp contraction in commercial loans and high funding costs have placed SME exporters in a severe liquidity squeeze. While the CBRT's decision to raise rediscount limits is a step in the right direction, the banking sector's declining risk appetite and macroprudential constraints are causing real credit growth rates to recede. It is virtually impossible for exporters to maintain global competitiveness under 45-50% commercial loan rates; selective credit mechanisms must be deployed more effectively before this financing bottleneck leads to permanent capacity loss and premature deindustrialization in the industrial core.