ITO President Şekib Avdagiç said, “We have to reduce the foreign trade deficit; we do not have the luxury to increase it. Here, it is not possible for us to draw a realistic picture just by tracking import and export figures. As we move towards 2026, we must also set an import target as Turkey.”
Avdagiç stated that they expect the deficit in goods exports to be around 85-90 billion dollars, saying, “I think this is the issue we need to pay the most attention to. That is, Turkey’s inability to close the foreign trade deficit for the last 150 years. Whatever happened to us, happened because of this. Because our exports are 85 billion dollars below our imports, when we increase our exports by 10 percent and our imports by 7 percent, both are increasing by the same absolute value.”
Avdagiç emphasized that part of the goods foreign trade deficit is closed by service exports, stating, “Service exports are continuing at a certain level this year despite adversities in some sectors. We will reach the targets set by our President on January 3, 2025, regarding goods and service exports. According to the trend here, we will reach this target unless there is an extraordinary external conjuncture.”
“We do not have the luxury to increase the foreign trade deficit”
Şekib Avdagiç noted that as we move towards 2026, targets should be set for imports as well as exports, and these should be tracked. Avdagiç said the following: “We have to reduce the foreign trade deficit; we do not have the luxury to increase it. Here, it is not possible for us to draw a realistic picture just by tracking import and export figures. As we move towards 2026, we must also set an import target as Turkey. Turkey’s import and export figures are, of course, followed very closely on both the goods and service trade sides. Our Minister of Trade, Ömer Bolat, presents goods exports, goods imports, service exports, and service imports in every presentation. We have targets for exports, but we do not have a set target for imports. We need to bring to the agenda a process that prioritizes the approach of how we can produce some of the products we import domestically and thus reduce our imports. For example, Turkey has not been able to make an investment in plastic raw materials for years in the plastic sector. There are many studies and incentives, but the domestic supply of Turkey’s total plastic raw material need has fallen below 15%.”
“The issue of accessing credit is currently a more important issue than the cost of credit”
Avdagiç said that the Istanbul business world agrees that inflation must be reduced without ‘buts’ or ‘ifs’, but they demand that their expectations regarding market reflections be met. Avdagiç noted that the most important of these expectations is that credit allocations, especially for SMEs, should be excluded from credit restrictions. Stating that some decisions have been taken regarding this, Avdagiç said, “Banks, stating that this framework pressures them, cannot place sufficient credit to SMEs. The issue of accessing credit is currently a more important issue than the cost of credit.”
Avdagiç noted that the second issue is the spread between the Central Bank’s reference interest rate and commercial loan interest rates. Avdagiç continued as follows: “Due to the obligation to hold 60% of their deposits in TL, banks are very aggressively rushing for TL deposits. This increases the cost for banks while collecting TL deposits. Since the cost increases for banks, they have to automatically increase their credit costs. Therefore, this issue is not something that only banks can regulate at the moment. Ultimately, empathy is also necessary.”
“If you are currently still collecting deposits at 47-48 percent, at what rate will you sell it? In this sense, it would be beneficial to review those rates as well. When all the sharp and harsh rules are combined, a serious contraction occurs in the system.”
“Turkey has become expensive on a forex basis”
Avdagiç said, “We had a detailed meeting with a major pulse exporter firm of ours at the Anuga Food Fair in Germany. He says, ‘I used to meet all my needs from the domestic producer, process it, and export. Currently, 80 percent of my exports are carried out by processing and packaging products I source from abroad in Turkey.’ Some added value certainly occurs, but Turkey has become expensive in this sense when you look at it on a forex basis. We must not lose the balance.”
Avdagiç said that, contrary to gastronomy prices, hotel prices in Istanbul are still very cheap compared to the European scale. Avdagiç stated, “You can stay in a 5-star hotel in Istanbul for the price of a 3-star hotel in a town in Europe. There still hasn’t been a recovery in hotel prices.”
“THY, which plans to increase its fleet to 813 aircraft by 2033, will of course buy aircraft from Boeing”
Responding to a question about Turkish Airlines’ aircraft purchase agreement with Boeing, Şekib Avdagiç said, “Boeing is not a new topic. Turkish Airlines already has a significant order from Boeing. Turkish Airlines, which plans to increase its fleet to 813 aircraft by 2033, will of course buy aircraft from Boeing. There is both a fleet expansion process and a fleet renewal process here. While expanding your fleet, you also need to dispose of the old aircraft you have and renew them with new aircraft. You renew your fleet for three reasons: fuel savings, passenger satisfaction, and reduction of maintenance costs and operating costs. Because you have significant competitors. In Europe, for the first time last year, the share of low-cost carriers in total flights exceeded 50 percent. While Turkish Airlines is achieving such a successful momentum and growing amidst all this, these debates cannot have any justified side.”
To a question about whether it is possible for Boeing to purchase more parts from Turkey, Avdagiç gave the following answer: “Boeing buys parts from Turkey at certain rates. TUSAŞ is seriously a supplier for both Boeing and Airbus in this regard. Besides that, there are other private sector companies from which it makes purchases from Turkey. We need to increase their number. Boeing and Airbus have an unwritten rule. They prefer to work with companies that are certified for part procurement and are of a scale of 100 million dollars. When we apply this filter, we have very few companies, not many, just a handful. So we need to do a bit of self-criticism. We need to increase the number of competent companies we have in this field. Rather than looking for a problem at Boeing and Airbus, we need to increase our efforts in capacity increase, certification, and creating competent companies.”
“We gained a trump card to balance with the USA”
Regarding the LNG purchase agreement made with the USA, Avdagiç also said the following: “Turkey is already an LNG importer. We will buy LNG from an existing source, it’s not that we are buying from America additionally. We are replacing this, meaning we are putting it in its place. Depending on the changing world balances, we are diversifying our energy supply sources. I view it positively. Boeing is a purchase that is already within the package, within the loop.
LNG, something new here. We have gained a bargaining chip to balance things out with the US very quickly. I think we have gained a bargaining chip to obtain a more advantageous status regarding some taxes applied to us by the American authorities. Trump is currently imposing very serious tax rates on those where the trade balance is against America. We expect a rapid improvement and pullback. Our Ministry of Trade is also working on this. Therefore, I see this as an opportunity to grow our trade with the US. Of course, we need to work hard. No one is saying ‘I am selling to you on a golden platter, and I will buy from you’. But I think a window of opportunity has opened.
“All the comments are that however many Toggs come to Germany, they will be sold”
Stating that he made several visits to Germany recently, Avdagiç noted that Togg has created a very serious image in Germany. Avdagiç continued as follows: “You can be subjective in your comments, but the 5 stars Togg received is a very objective criterion. Togg is a tremendously durable car. You know how Volvo has an image, rest assured Togg is above that. A positive perception about Togg has been formed now. Therefore, Togg is awaited in Germany with great excitement, beyond what everyone predicted. All the comments are that however many Toggs come to Germany, they will be sold. The feedback I get from everyone I talk to about this is in this direction.”
