Foreign Trade Data in the Leather Sector Reversed Over 3 Years

Turkey has shifted from a leather sector trade surplus position to a trade deficit position.

Turkey's leather and leather goods exports declined by USD 530 million over the past three years, falling from USD 2.056 billion to USD 1.526 billion, while leather and leather goods imports rose from USD 1.810 billion to USD 2.420 billion.

In 2022, Turkey maintained a trade surplus of USD 245 million in the leather and leather goods sector, but by the end of 2024, it shifted to a trade deficit position of USD 895 million.

Erkan Zandar, Chairman of the Aegean Leather and Leather Goods Exporters Association, noted that the sector's export figures have regressed to levels from seven years ago, emphasizing that in 2024, all subsectors—footwear, saddlery, finished leather and furs, and leather garments—suffered losses in Turkey's overall export figures.

Zandar stated: "Turkey's leather and leather goods exports were USD 1.858 billion in 2023, declining by 18 percent to USD 1.526 billion in 2024. Our footwear exports experienced a 22 percent decline, falling from USD 1.1 billion to USD 877 million. In the footwear auxiliary industry, Turkey recorded a 38 percent export loss nationally, and 44 percent in the Aegean Region. This clearly demonstrates how severely our sector is being strained by economic pressures and international competition conditions.

Our loss in leather and fur garments was 18 percent, with exports declining from USD 236 million to USD 193 million. Our saddlery product exports decreased from USD 273 million to USD 239 million, representing a 12 percent reduction. Our finished leather and fur exports declined by 3 percent, falling from USD 221 million to USD 214 million. Employment figures in the final quarter of 2024 dropped by 25 percent."

Zandar shared that the process initiated by Turkey's interest rate reduction decision in September 2021 resulted in inflation figures reaching 65 percent in 2022, while exchange rate increases remained at 41.7 percent, and continued: "By 2023, inflation increase stood at 64.7 percent, while dollar rate increase was 57 percent. In 2024, inflation was 45 percent while the dollar rate increased 20 percent. Over the past three years, the exchange rate has eroded by 48 percent against inflation. Currently, we are positioned approximately 50 percent more expensive than our competitors. This clearly reflects in our export figures. If the exchange rate had increased proportionally to inflation from 1 January 2022 to today, the dollar rate should be TRY 52.3 today. This exchange rate would have protected our export figures. This policy is reducing our exports while increasing our imports. It is contributing to employment in other countries' workforces."

Decline in the Aegean Region remained more limited
Chairman Zandar, providing information that the leather and leather goods sector's decline in the Aegean Region remained more limited at 9 percent in 2024, stated: "Our Aegean Leather and Leather Goods Exporters Association members generated USD 182 million in exports in 2023, while bringing USD 165 million in foreign currency to our country in 2024. Our footwear exports declined by 15 percent from USD 112 million to USD 95 million. Our leather and fur garment exports showed a 22 percent decline, with export figures falling from USD 27 million to USD 21 million. While export figures in all four subsectors declined nationally, our Aegean Region showed a 15 percent increase in finished leather and fur exports and a 4 percent increase in saddlery product exports," summarizing the Aegean Region's export figures.

We support the measures taken
Zandar explained that they support the 10 percent additional customs duty on footwear imports implemented as of 31 December 2024, noting that this increase represents an opportunity for footwear manufacturers. Describing the government's employment-focused incentives for labor-intensive sectors as the right step, Zandar stated: "This support is of great importance for our sector's 2025 plans. In particular, the TRY 2,500 support per employee is important for reducing labor costs in the sector and increasing production. We hope for the elimination of political uncertainty along the Russia-Ukraine axis, which are our largest export markets, and viewing 2025 as a recovery year, believing that easing of the global crisis environment will trigger increased demand in our target markets."

We will work to increase productivity
Recalling that many companies in the ready-made garment and textile sectors have shifted their production to other countries, particularly Egypt, Zandar spoke as follows: "We are the only sector that has not moved production to another country. We are not a sector that can produce in different places. We will continue as far as we can take what we have, and after that, we will either change sectors or seek another way. By increasing our productivity, we will seek ways to stay afloat by first reducing our costs currently reaching 62 percent excluding raw materials to 50-55 percent, and then to 40 percent. By conducting exports based on more productive and sustainable production, we will enter 2025 and 2026 prepared."

Gündoğdu: "Saddlery sector rose from last place to second"
Halil Gündoğdu, Vice Chairman of the Aegean Leather and Leather Goods Exporters Association, providing information that the saddlery subsector from leather subsectors is a high value-added product group with an export rate of USD 14.7 per kilogram, noted that the saddlery sector, which had the lowest exports among leather products in 2013, has become the second-largest leather and leather goods group generating the most exports after footwear with an export volume of USD 239.5 million by the end of 2024.

"Luxury bag and accessory brands worldwide and in Europe have directed their purchasing to Turkey," said Gündoğdu, "Branding and overseas promotion efforts in the sector have accelerated. Turkey captures only 0.27 percent of the global total USD 90 billion export market. If the sector is supported, it can reach 1 percent share," he stated.

Izmir requests a leather organized industrial zone
Gündoğdu, conveying that they wish for an organized industrial zone in Izmir where the leather and leather goods sector would cluster to preserve the sector's developing industrial and export potential in Izmir and continue its pioneering role in competitiveness and sustainability, continued: "It is undisputed that the clustering of our leather sector in Izmir, Turkey's third-largest city, will contribute to increased employment, continuity of qualified semi-skilled personnel, and development of the sector's sustainability-related infrastructure. For the development of auxiliary industries in labor-intensive sectors, all elements of the sector must work together. It is assessed that awareness will be raised regarding Izmir's sustainability image work through the establishment of the Izmir Footwear, Saddlery, Leather Garment, Leather Goods Organized Industrial Zone. All our sector stakeholders positively welcome a new organized industrial zone relatively close to the city, where our personnel can easily commute, and which can meet our sectors' needs within the framework of the European Green Deal."

Arıoğul: "We have raised prices for three years"
Mustafa Arıoğul, Board Member of the Aegean Leather and Leather Goods Exporters Association, sharing that the average export price for leather garment products exceeds USD 70 and that they conduct high value-added production, stated that over the past three years they have been forced to continuously raise prices to customers, currently attempting to proceed without increasing prices so customers do not leave despite rising costs, and emphasized that 2025 will be a very difficult year for the leather garment sector.

Turkish leather sector participated in Garda with 92 companies
The Aegean Leather and Leather Goods Exporters Association organized Turkey's National Participation at Expo Riva Schuh & Garda Bags Fair held in Italy on 11-14 January 2025. With Turkey's national participation organization, 32 companies participated in the fair, while Turkey was among the countries with the densest participation with 92 companies.

Erkan Zandar, Chairman of the Aegean Leather and Leather Goods Exporters Association, shared that in a survey conducted after the fair with the participation of 29 footwear and 2 saddlery companies, companies provided feedback that they had productive bilateral meetings with importers from the United States, Czech Republic, and Spain.