Contraction Calculations In Growth

Over the last month, it has been clear from the news that the impact of the global crisis has begun to make itself felt in Turkey. Every sector is measuring the dimensions of the earthquake. Before the crisis the growth targets for 2009 varied between 10 percent and 40 percent. But the crisis has turned the calculations upside down. The passenger and light commercial vehicles sector had set a growth target of 24 percent for the first half of 2009, but the market is now expected to contract by 35 percent. In leasing there has been a 180 degree turnaround. A growth target of 30 percent has been replaced by expectations of a 30 percent contraction. Many sectors have revised their expectations. Those who cannot see ahead are still busy trying to revise what is likely to happen in 2009.

“The global crisis has still not bottomed out. We are witnessing the collapse of global companies which we never imagined could fail. Every day brings surprising news. Unemployment is increasing. Such an environment has made it difficult to make forecasts. This year we were looking at the first half of 2009 more optimistically. Now, we haven’t abandoned hope but we have reduced our growth targets.”

This evaluation belongs to one of the most important sectoral representatives in Turkey. The other news coming from the sectors is not reassuring. Three of the five largest automotive companies saw their third quarter net profits decline by 40 percent compared with last year. There has been 6 percent decline in output in manufacturing industry and a fall of around 17 percent in the textile industry. As a result of the crisis, the previous forecasts for budgets, growth targets and investments are no longer valid. Now calculations are being made again. Capital studied the calculations before and after the crisis in more than 20 sectors.

Major Decline In Automotives
The automotive sector finished 2007 as the leading sector with exports of US$20 billion. But the crisis has resulted in, and will result in, the automotive sector, which is Turkey’s export champion, experiencing some very dramatic changes. Three of the five largest automotive companies saw their 2008 third quarter net profits decline by 40 percent compared with 2007. A total of 592,000 passenger and light commercial vehicles were sold in 2007. The forecast for the end of 2008 is 530,000. Doğuş Otomotiv CEO Ali Bilaloğlu says: “These figures mean a contraction of 11 percent compared with 2007.” Honda Turkey Assistant General Manager Ümit Karaarslan says that before the crisis they had been expecting the market to grow by 24 percent in 2009 but now the sector was expected to contract by 35 percent. Karaarslan says: “This decline will have a knock-on impact from the producer to the seller, the distributor, the parts manufacturer, the insurance company, the bank and the media sector. It will have a six to one negative impact.”

The Contraction Plan In Construction
Construction is regarded as one of the most important sectors because of the broad area which it affects. The sector closed 2007 with 5 percent growth, the worst performance in the last five years. The situation has deteriorated still further as a result of the global crisis. Erdal Eren, the President of the Turkish Contractors Union, says that the sector contracted by 1 percent and 3.1 percent in the first and second quarters of 2008 respectively. He says that the most optimistic forecast is for growth to be flat through 2008 as a whole. Eren said that previously the sector had been predicting growth of 10 percent in 2009 but that it now expected a contraction of 5 percent.

The “Let’s Hold On To What We Have” Front
Representatives of the textile, chemicals, technology retailing and furniture sectors, which are amongst the most important sectors in Turkey, are not expecting any growth on the domestic market in 2009. They all describe the situation they are in as: “We are trying to preserve the volume we achieved in 2008.” The growth targets for these sectors which now foresee zero growth in 2009 had previously been up to 15 percent. İsmail Gülle, the president of the Istanbul Textile and Raw Materials Exporters’ Union, says that the textile sector will grow by 10 percent to US$16.5 billion at the end of 2008. Gülle notes that before the crisis the sector had been targeting growth of 15 percent but that now they had been forced to revise their targets downwards.

Watch Out For Those Who Are Changing Down A Gear
In 2007 the Turkish retail sector was the 10th largest in the world with a turnover of US$150 billion. In 2008 the sector grew by 10 percent. Nuşin Oral, the head of the Shopping Centers and Retailers’ Association, used to say that the sector would reach US$200 billion by 2010. That means that the planned growth for 2009 was 20 percent. But the events of the last month have turned all of the calculations in retailing upside down. Today, the most optimistic growth target for the sector in 2009 is 10 percent. Tourism, which is one of the sectors with the highest rates of return, has survived the bottlenecks since 2001 with only minor damage. Murat Dedeman, the Chairman of the Tourism Investors’ Association (TYD), forecasts that the sector will close 2008 with growth of 19 percent and adds: “I predict that we shall grow by 5 percent instead of 10 percent in 2009.”

Those Who Plan To Overcome The Crisis Through Exports

Foodstuff’s New Target
Şemsi Kopuz, the President of the Turkish Foodstuffs Federation, notes that the rates of growth and exports in foodstuffs will decline in 2009 and that the sector will experience financing problems. But he says that they are still targeting an increase of 20 percent in exports next year.

The Expectation Is The Same In Chemicals
Murat Akyüz, the President of the Istanbul Chemical Goods and Products Exporters’ Union thinks that they will achieve the target of US$14 billion in exports in 2008. Akyüz says that they have not revised the target of US$16 billion in exports by year end 2009.

The Construction Machinery Insurance
The construction machinery sector, which is expected to achieve exports of US$1.35 billion by the end of the year has put a smile on Turkey’s face. Rızanur Meral, the President of the Turkish Construction Machinery Distributors and Manufacturers Union, says that the sector will increase its exports by 25 percent in 2009.

Özlem Aydın Ayvacı
[email protected]