Turkey sharply increased exports to Russia amid sanctions

In June 2022, the EXPORT of goods from Turkey to Russia increased by 46% compared to June last year and by 52% compared to the previous month, to $791.4 million, the Turkish Institute of Statistics reported on July 29.

In May, the figure was $519 million. The June volume is a record for a month since at least the beginning of 2010, follows from the data of the UN trade database (Comtrade). Deliveries of Turkish fruits, such as peaches and cherries, have grown strongly, but the supply of machinery, equipment and components has also increased markedly.

The Russian authorities have stopped publishing foreign trade statistics. So far, only such Asian partners of Russia as CHINA , Taiwan, SOUTH KOREA, Japan, Vietnam, Malaysia, Thailand, Turkey have reported for June, says Iikka Korhonen, HEAD of the Institute for Economies in Transition at the Bank of Finland, and all of them have significant exports to Russia. fell compared to a year ago - with the exception of Turkey, which increased exports by 46%.

In 2021, Turkey ranked tenth in the list of the largest exporters of goods to Russia. However, in 2022, due to sanctions, exports from countries recognized as unfriendly dropped sharply, as a result of which Turkey bypassed Italy, Poland, Japan, the Netherlands, France, and the usa on this list .

Based on the performance of European countries for May, if we assume that their deliveries to Russia continue to decline in annual terms, Turkey, by the end of June, is likely to come out on the fourth or fifth line among the largest suppliers of Russia, second only to China (exports to Russia in June was $5bn minus 17% year-on-year), Belarus ($1.65bn in May), Germany ($1.1bn in May), and possibly, though unlikely, Kazakhstan, whose exports to Russia totaled $572m in May ( data for June is not yet available).

Peaches and auto parts

In June, Turkish suppliers brought $168 million worth of fruits and nuts to Russia, 48% more than in June 2021 ($113 million) and twice as much as in May 2022 ($72 million). Including deliveries of apricots, cherries and peaches in June reached $136 million (in the same month a year earlier - a little less than $100 million).

But Turkish exports of equipment and mechanical devices (group 84 of the commodity nomenclature of foreign economic activity) also increased - from $73 million in May to $102 million in June, electrical machines and equipment (group 85) - from $28 million in May to $32 million in June, land transport and its components (mainly export and re-export of auto components from Turkey to Russia) - from $25 million in May to $34 million in June, plastics and products from them - from $34 million in May to $48 million in June.

Today, Turkey is going through a period of industrialization, which is additionally stimulated by cheap credit, Dmitry Belousov, head of the department for analyzing and forecasting macroeconomic processes at the TsMASF, told RBC. The country focuses on exports as much as possible, because otherwise it will be covered by overproduction and recession. At the same time, Turkey is a fairly large producer of technological products that are in demand in Russia, the economist noted. We are talking primarily about automotive components and a variety of engineering products.

“Now Turkey is adapting to our market, and its high position in the list of trading partners is a rather natural combination of special relations and the simple fact that in recent decades Russia has an industrial power at its side, ready to produce a huge amount of industrial products. The idea of ​​a backward Turkey that barely survives and exports only builders is a picture of the world in the mid-80s,” the expert said.

At the same time, Belousov admitted that the growth in exports was achieved not only at the expense of goods produced in Turkey. “Turkey has become a fairly large hub for entrepreneurs, large flows of goods flow through it. And of course, you need to understand that the Turks are great traders, so for them the current situation is almost ideal,” he said.

Russia in first place in Turkish imports

In Turkey's total exports for the first half of 2022 ($125.9 billion), Russia accounts for only 2.3% (or $2.9 billion). Turkey supplies much more to the USA and European countries (Germany, France, the Netherlands, Italy, Spain, Romania, Great Britain). However, Russia came out on top in the supply of its goods to Turkey: in January-June, Turkish imports from Russia reached $27.7 billion (16% of the country's total imports) - against $20.1 billion from China . More than 60% of Turkish imports from Russia are oil and gas.

In July, BLOOMBERG reported that the presidents of Russia and Turkey intend to discuss switching to lira in payments for Russian energy resources, so that Russia can use the Turkish currency when purchasing goods and services from local suppliers.

Turkish companies are ready to fully supply Russia with their food products, as well as products from countries that have announced sanctions , Sergei Mironov, the founder of the MEAT & Fish restaurants, a member of the Moscow branch of Delovaya Rossiya, wrote in his blog in July. “Of course, they will be more expensive, but only taking into account logistics. So the prices are not exorbitant,” he wrote following a meeting at the Ministry of Industry and Trade with representatives of the Turkish authorities and companies. “The same situation with the equipment. The Turks are ready to supply spare parts and European equipment, but they have their own alternative for this, ”the entrepreneur added.

Against the backdrop of a general negative trend, export volumes from Belarus and Switzerland to Russia are also growing. Belarus in 2022 is consistently increasing supplies to Russia and has bypassed Germany in this indicator. In May, Belarusian exports to Russia increased by 29% compared to the same period in 2021, to $1.65 billion (Belstat data for June has not yet been released). Swiss exports rose 79.7% year-on-year in June to 430 million francs ($441 million), up from 239 million francs in June last year, according to the country's customs data. Three-quarters of the June volume (326 million Swiss francs) was pharmaceutical products, which are generally exempt from Western sanctions.