Problems in the global economy and key export markets could limit growth for Turkey's plastics industry — the second-largest maker of plastic products in Europe — to 4 percent in 2017, according to a prediction from one of the country's trade associations.
The Istanbul-based Turkish Plastics Industry Foundation, or Pagev, said Turkey's plastics sector has the potential to grow between 5.5 percent and 7.4 percent this year, but may miss that target on the back of global economic and political challenges.
Pagev Chairman Yavuz Eroglu said that settling the conflict in neighboring Syria would be “one of the best things that can happen for the industry in 2017.
“We will all appreciate this from a human perspective, while the industry will further appreciate the opportunities this will reopen,” he said in a statement. “It is possible for Syria to become Turkey's largest trading partner in plastics if the civil war comes to an end. Stability in the region will help us increase our exports to Iraq as well.”
Turkey says its plastics processing sector is the second-largest maker of plastic products in Europe, after Germany.
Besides exporting finished plastic goods to the Middle East, Turkey is Europe's largest maker of appliances and has a sizable car industry, both significant end markets that tie Turkey's plastics industry into global trade.
“Our business was adversely affected by problems around the world, shrinking global trade volumes, decline in commodity prices, and the hostilities in our primary export markets,” Eroglu said.
Still, he said that “despite all [the] difficulties, our sector managed to achieve growth in production and exports.”
Turkey's plastics industry grew to 9 million metric tons of production and direct exports of plastic products were valued at more than $4 billion in 2016, Pagev said. That figure does not include plastic components exported as part of other products like cars or electronics.
In its report, Pagev said the economic health of the United States and the euro zone is the single most important factor impacting the Turkish plastics industry.
But it also highlighted domestic demand as likely to be an increasingly important driver in 2017, with domestic sales expected to grow 7 percent in the country of 75 million people.
“The factors that restricted global economic growth in 2015 and 2016 are expected to continue in 2017 as well,” he said. “Emerging and developing economies will continue to face challenges, while geopolitical tension may exacerbate the difficulties experienced by the global economy.”
He said Turkey's plastics industry is taking steps to improve itself, like last year's announcement of an R&D center to help processors become more competitive globally.
Pagev also called for help in reducing the negative impacts of the local plastics processing industry's heavy dependence on imported raw materials and equipment, which can account for up to 85 percent of the materials that Turkish companies buy. It argues for cutting import taxes on raw materials.
“We argue that local producers should be protected through incentives that reduce production and investment costs rather than additional taxes on raw material imports,” he said.