Evaluation Note / İrem Kızılca

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"Following the 2008 crisis, Turkey, which had demonstrated high economic growth with a low current account deficit, had to increase its current account deficit to sustain comparable levels of economic growth. Moving forward, low growth and high current account deficit expectations for 2014 pose a risk for Turkey. The largest factor causing the current account deficit is trade in goods and services. Excluding oil, Turkey’s largest trade deficit is with China, with a share of 26%. Factors impacting Turkey’s trade deficit with China help explain the composition of the current account deficit.

Turkey’s trade with China has been accelerating since the late 90s. While the value of trade between Turkey and China was below $1 billion in 2000, it has exceeded $24 billion in 2012. As of 2012, Turkey’s exports to China were $2.8 billion, while its imports were $21.2 billion, resulting in a $18.4 billion deficit.

Three points concerning Turkey’s economic relationship with China stand out considering the rising importance of trade with China for Turkey.  First, Turkey imports high-tech products at a low price from China. Second, Turkey exports a large fraction of natural resources to China below average world prices. Third, despite the rapid increase in exports over the past 16 years, Turkey has neither captured a significant share of Chinese imports, nor integrated into emerging Asian markets..."