Turkey is one of the world's largest textile producers. In 2020, Turkey became one of the four significant exporters in textiles, totaling 3.3% of global exports. The industry continues to grow, with the value of exported textiles and clothing increasing by more than 100% since 2000. The majority of textiles leave Turkey to reach Europe. Germany, the UK, and Spain rank as the top three destinations for goods from Turkey. It's estimated that these three countries are importing textiles worth $9 billion in 2019 only.
But since January 2022, the country has been hit hard by increased energy prices and various taxes. The sharpest increase in electricity was for households by approximately 127 percent for uses over 150-kilowatt hours and 52 percent for below 100-kilowatt hours. In comparison, a family's average monthly electricity consumption in Turkey is over 200-kilowatt hours. The price of natural gas increased by 25 percent for households, 15 percent for power plants, and 50 percent for industrial facilities.
The famed textile industry in Babadağ has ground to a halt. This isn't due to the lack of business, but rather because the companies are having trouble paying their unmanageable electricity bills. The town of Babadağ is a small place in the Turkish province of Denizli in western Asia Minor. The textile industry has made a living here for centuries by providing jobs to all lifestyles. But now, the approximately 4,000 looms are standing idle.
The reason is that the electricity price has risen significantly, with inflation at almost 50%. Many companies can no longer afford to produce their products and stop. Customers in Europe are unwilling to pay higher prices and look for alternative productions.
This has, unfortunately, severe consequences. The Turkish State Statistical Institute (TÜIK) has just published the figures: 11.2 percent unemployment, but the number of unreported cases could be significantly higher.
An unprecedented energy crisis hit the country hard.
The Turkish energy crisis is worsening, with natural gas shortages becoming increasingly prevalent. As a result, the country relies heavily on imports from the Middle Eastern nation Iran, which sometimes delivers more gas but sometimes less or none. The consequences are higher fuel bills, production stalls, and power outages. In addition, uncontrolled inflation has made all things more expensive, leading to fuel prices.
For the past month, Turkey's energy and gas market has been in turmoil. With concerns about future supply interruptions or failures also mounting in the Turkish industry, it is unlikely that the current crisis will soon come to an end. Many entrepreneurs are worried about how Turkey will be seen internationally in the production industry. Due to the depreciation of the currency and President Erdoğan's unorthodox monetary policy of cutting interest rates to fight inflation, Turkey is already in the news internationally.
Is this the beginning of the end?
The future of the Turkish textile industry will depend on how it can adapt to these changes in order to increase its competitiveness in a globalized world.