Rising protectionism and escalating trade wars may uniquely shape the global landscape by 2025, as Turkish business leaders express deep concerns over current economic dynamics, particularly with major trading partners like Europe and the United States.
Nail Olpak, the chair of the Turkish Foreign Economic Relations Board (DEIK), recently conveyed these warnings during a press meeting, citing the pressing nature of block formations in trade and increasing tariffs as critical issues for the upcoming years. He elaborated that both 2024 and 2025 are likely to mirror each other in terms of economic challenges, fearing that the rise in protectionist measures will garner more attention.
Evolving Trade Dynamics
The global trade landscape has already suffered a noticeable decline in momentum over the past five to six years, especially among developed nations. Olpak characterized this deceleration as a key concern for the Turkish economy, emphasizing that while growth persists, the reduction in growth rates paints an unsettling picture. The emerging trend towards trade wars, particularly with the advent of more assertive tariff policies, was accentuated during and after Trump’s election campaign, where the former U.S. president articulated intentions to impose higher tariffs, especially on imports from Canada, Mexico, and China.
At his inauguration, Trump signaled potential plans for tariffs ranging from 10% to as high as 60% on specific goods, exacerbating concerns about a potential trade war that could stifle international trade relations. While immediate actions have not been taken, his unpredictable approach has raised alarms among global businesses, signaling volatility that could impact economies worldwide.
Concerns About Europe
As Turkey’s top trading partner, Europe plays a crucial role in Olpak’s analysis. He noted that approximately 56% of Turkey’s exports and 50% of its imports are linked to European countries, highlighting the significance of their economic health. However, he cautioned that various factors, including demographic challenges—like the impending retirement of nearly 6 million skilled workers in Germany—compound fears about economic stagnation in the region.
The uncertainties brought on by Brexit also notify a complex relationship heading into 2025, as Turkey watches Europe closely, often with trepidation. The lackluster performance of Germany, Turkey’s largest export market, adds to this concern. Olpak remarked that business sentiments in Germany appear weighed down by fatigue and reluctance, as many industries are observing stagnation in operational activities.
Should these dynamics continue, both Turkey and Europe stand to face considerable economic challenges that could hinder growth. Despite maintaining close relations, the expectation that conditions might significantly improve is fraught with skepticism.
Turkey’s Economic Outlook
Domestically, Turkey has been grappling with its own set of financial challenges. The government’s medium-term program (MTP) aims to tackle issues such as high inflation through fiscal discipline. The central bank recently reversed an aggressive tightening drive that began earlier in 2023, leading to interest rate decreases to boost economic activity—yet Olpak warns that substantial changes in economic conditions are unlikely in 2025.
While Turkey’s exports achieved a marginal increase, reaching $262 billion, Olpak stressed that the prevailing global climate suggests it will be challenging for the country to significantly ramp up its export figures in the next few years.
He articulated a realistic outlook, indicating that there is “no scenario” where exports could realistically expand by $30 billion to $40 billion annually. Turkey’s continuing efforts to stabilize its economy will play a pivotal role in navigating the forthcoming trading challenges expected in 2025.
Future of Trade Relations and Ongoing Conflicts
Furthermore, Olpak shed light on potential trade resumption between Turkey and Israel, contingent on the lasting nature of a ceasefire in Gaza. He stated that trade relations previously suspended due to conflict could resume if peace is substantially achieved. However, as geopolitical landscapes shift, complexities surrounding these relationships remain.
On the broader horizon of regional conflicts, notably in Syria, Olpak asserted that it is “too early” to discuss reconstruction efforts due to ongoing security issues. He stressed that any rebuilding initiatives necessitate sufficient resources and a stable environment, which are currently lacking.
Conclusion
Overall, as we approach 2025, the implications of rising protectionism and trade wars are likely to reverberate across the global economy, affecting not only Turkey but also its crucial trading partners. The uncertainties surrounding Europe, fluctuating dynamics with the U.S., and pressing domestic challenges compel stakeholders to remain vigilant and adaptive in an ever-evolving market landscape.
As businesses navigate this unpredictable terrain marked by potential tariffs and the reshaping of international trade agreements, the need for strategic planning and resilience has never been more paramount. The next few years may define the future of global trade, emphasizing the importance of cooperation amidst looming protectionism.
