Once more a force to be reckoned with

The Turkish leather sector is endeavouring to become a major brand for leather garments in the international market while introducing themselves into different countries by practicing market discrimination. The old reliance on Russia is a thing of the past and lessons have been learned. Now the industry is marching to the tune of 'Türkiye is a leather country - Türkiye creates fashion'. However, the country was plunged into turmoil in mid February when the decision was taken to float the currency. The move was supported by the IMF and key allies including the US. Inflation, which had been as high as 100%, was targeted to be 30% rate to the end of 2000 dropping to 10-12% for 2001. Now an IMF team in Ankara will need to decide what alterations to make to their $11.4 billion lending programme and set new inflation targets for the current year. The devaluation is widely expected to cause some enterprise and bank failures and higher inflation. Economists say the country should brace itself for high inflation and a slump in growth in the short term. Horst Kohler, IMF managing director, said: 'Continued fiscal adjustment and a strict monetary policy should help stabilise the exchange rate and ensure, after an initial increase, that the inflation rate continues to decline and that other gains under the economic programme are preserved.' Türkiye sees itself as 'the intersection point of the world' acting as a bridge between Europe and Asia and believes it can provide a springboard for international companies. It benefits from customs union with the European Union now that it has obtained the status of prospective country for EU membership and is recognised by the US as being among the top ten biggest developing markets. The leather sector has the capacity to produce the most leather and doubleface garments in the world and entered the 21st century having learned the painful economic lessons of the late 1990s. The industry grew fast through the suitcase trade in the final decade of the last century but the particular nature of the market led it to become too dependent so that it was badly damaged by the Russian crisis in 1998. It suffered significant losses in both production and exports. Having reached a production level of 42.5 million in 1997, which is considered to have been the best year, the volume dropped to 17.5 million garments in 1998. The final figures for 1999 and 2000 are expected to reach 19.75 million and 22 million, respectively, showing a year on year increase of 10%. There was a decrease in leather trade in 1999 when the industry continued to reel from the negative effects of the economic crash witnessed first in Asia and then spreading to Russia. This was exacerbated by the earthquake which caused devastation close to the tanning region. Leather companies, who had contributed largely to the Turkish economy through their involvement in the suitcase trade, were faced with the necessity of contributing towards official exports by selecting dynamic markets such as the EU, China, US, Canada and Japan, to make up the short fall suffered by the collapse of the Russian customer base. Total leather and leather products exports fell to US$507.8 million in in 1999, a decrease of 23.4% from $662.7 million in 1998 (excluding the suitcase trade). For 2000 the projected exports were expected to exceed $550 million, having reached $507.8 million in the first eleven months. According to ITKIB's figures, the biggest export decrease was seen for footwear. Leatherwear, leathergoods and leather products accounted for 52.2% of the 1999 total with $265 million; shoes, gaiters and similar products amounted to 21.6% at $109.5 million; pelts, furs, synthetic furs etc were 16.8% at $85.5 million; and raw pelts, skins and sole leathers took 9.4% and $47.6 million. In 1999, the shoe category dropped 41% compared with 1998, followed by raw pelts etc by 30% and leather apparel etc by 20%. The top 15 countries for exports from Türkiye are: Germany, Russia, France, US, UK, the Netherlands, Spain, Italy, Saudi Arabia, Austria, Poland, Israel, Greece, Belgium and Luxembourg. Among these countries Germany has taken first place with 28% followed by Russia with 15.7%, France with 8.9% and the US with 5.5%. ITKIB report a drop in imports from $753.6 million in 1998 to $348.3 million in 1999, a huge decrease of 53.8%. This represents a reduced share in total imports of 0.86%, down from 1.64%.