Turkish exports registered 5% growth in the first quarter of 2002 and 18% in March year-on-year, acc...
Turkish exports registered 5% growth in the first quarter of 2002 and 18% in March year-on-year, according to the Turkish Exporters Association.
Haluk Akdogan, an analyst at SchroderSalomonSmithBarney (SSSB), says exports have become more important as domestic demand continues to struggle. In this light, the first-quarter growth in exports is all the more impressive.
He says: 'The growth is off a low base, however following last year's banking and economic crisis, March 2001 was a poor month for exports, and manufacturing exports did not react positively to devaluation until May 2001. The pick-up in March this year is also due to deferred sales from the short month of February. The data also suggests that Turkish exporters slashed prices by 5%-10% in dollar terms to help stimulate sales.'
Akdogan is keen on the auto sector as well as building materials companies such as Trakya Cam, Baticim and Akcansa. Automotive stocks that stand out are Tofas and Oyak Renault and to a lesser extent Ford Otosan, he says. Trakya Cam is trading off low price-to-earnings valuations, with strong earnings prospects predicted by the management and no major capital expenditure planned until 2005. It also has a strong market share in Greece, where margins on its core products, such as architectural glass, are much higher than in Turkey.
The only big export contraction was the agricultural commodities sector, which saw a 4% decline quarter on quarter.
The overall outlook for the Turkish economy in 2002 should be one of cautious optimism, believes Gabor Sitanyi, an emerging markets Europe fund manager with Schroder Investment Management, who is overweight in his exposure to the country. The country is on course for 3% economic growth this year, according to government figures and while this is lower than in previous years, it is a vast improvement on last year, which saw a real reduction of 8.5% in GDP, says Sitanyi.
'After last year, many people were hoping for growth of at least 6% but we are happy with this level of growth, as it shows the government is serious in its commitment to avoiding a permanent boom and bust economic cycle, which Turkey has been prone to in recent years.'
One of the keys to establishing a sound basis to the economy is the resolution of the country's banking crisis. Facing a bad-loan crisis of Japan-like proportions, the government, led by Bulent Ecevyt, is attempting to negotiate a bail-out package with the banks without appearing to give them an easy ride.
'The government appears determined to carry out this much-needed reform so that liquidity can be pumped back into fiscal system. The problem is the banks want more for their bad debts than the government is willing to pay. This is because the government has realised that using lots of taxpayers money to help the banks is not going to be a vote-winner,' he says.
His cautious optimism is tempered by his conviction that without a solution to the banking crisis, the IMF economic development programme and attached aid deal will fail to achieve its objectives. In addition, as the only Muslim Nato member and geographical location, Sitanyi feels there is a strong possibility that Turkey may find itself embroiled in the turmoil of the Middle East.
Exports grew by 5% in the first quarter.
Automotives leading the charge.
GDP growth of 3% predicted this year.
To ensure creditworthiness assessments compliant
Avoid broad-brush strokes
Partner Insight: Introducing the Architas education series for clients.
What made financial headlines over the weekend?