Turkey’s ready-to-wear sector badly affected by devaluation of TL against foreign currencies

While the export-supporting effect of the depreciation of the Turkish Lira is discussed, the Turkish clothing sector has been facing difficulties recently. Ready-to-wear sector has been able to meet its needs locally, due to depreciation of TL in years. While annual imports of related goods approached 3 billion dollars in the middle of 2014, this amount fell by 34 percent compared to 2014, down to USD 1.9 billion in March, this year. In the same period, exports rose to USD 12.6 billion and remained close to its previous levels. Thus, the rate of imports to exports of wearing apparels decreased from 22 percent to 15 percent.

Shifting production to Turkey from abroad usually took place from cheaper manufacturing centers. For example, imports of apparel made in China which were $ 969 million in 2014, went down by 37 percent at the end of 2017 to USD 606 million. In the same period, imports from Bangladesh decreased by 45 percent to USD 420 million.

In addition to the fact domestic companies have shifted their supply sources to the domestic market, the capacity utilization rate in the ready-to-wear sector continues to increase due to the decrease in security concerns and the increase in external demand. According to the data of the Central Bank, the capacity utilization rate of the sector increased to 80.7, indicating that an investment pressure experienced in this area was. The increase in the credit stock of the sector has increased by 7 percent since the beginning of the year, while the total loan growth remained at 4.9 percent in the same period.