Free Trade Deals Tilt Turkey’s Trade Balance: Export Coverage Ratio Slides Below 100%

Turkey’s export-to-import coverage ratio, one of the most closely watched indicators of external balance, has deteriorated sharply in trade conducted with countries that have Free Trade Agreements (FTAs) with Ankara. What was once a solid surplus-driven structure has, over the past decade, become a fragile balance — and, in recent years, a clear deficit.

According to calculations derived from Turkish Statistical Institute (TURKSTAT) data, Turkey’s export coverage ratio with FTA partners fell from 159% in 2015 to 98.1% in 2024, before sliding further to 91.6% in the first ten months of 2025. This decline signals a structural weakening in Turkey’s foreign trade performance, despite growing overall trade volumes.

PA Turkey Prompt (2)

The export coverage ratio measures the extent to which a country’s imports are financed by exports. Ratios above 100% indicate a trade surplus, while readings below that threshold point to a persistent trade deficit. Turkey’s recent figures underline that, even as exports rise in nominal terms, imports — particularly in high-value sectors — are increasing faster.

FTAs Expand Trade, But Not Balance

Turkey currently maintains FTAs with 22 countries and one country bloc, a network designed to boost exports, ease market access, and enhance competitiveness. These agreements span the Balkans, North Africa, the Middle East, Asia, and Europe, including the European Free Trade Association (EFTA) and the United Kingdom.

In 2015, Turkey’s trade with FTA partners appeared highly favorable: $38.9 billion in exports versus $24.4 billion in imports, generating a $14.5 billion surplus. By 2024, exports climbed to $49.1 billion, but imports surpassed $50 billion, erasing the surplus. In the first ten months of 2025, exports reached $43.8 billion, while imports rose to $47.9 billion, deepening the imbalance.

The data suggests that trade volume growth alone does not guarantee sustainability. While FTAs expanded Turkey’s commercial footprint, they also amplified exposure to countries specializing in advanced, high-tech goods.

Quantity Is Not the Issue — Quality Is

On the surface, Turkey’s diversified trade geography looks positive. In many Balkan and North African markets, export coverage ratios remain exceptionally high. Countries such as Georgia, Kosovo, Montenegro, Tunisia, Morocco, and Bosnia and Herzegovina post coverage ratios ranging from 300% to well above 500%. In Kosovo, the ratio exceeded 2,700% in 2025.

However, these markets account for relatively modest trade volumes. The core problem lies elsewhere: Turkey’s dependence on imports of high-technology and high-value goods from advanced economies.

High-Tech Imports Drive the Deficit

The most striking imbalance is with South Korea, widely regarded as Turkey’s most problematic FTA partner. In 2020, Turkey exported $1.1 billion to South Korea while importing $5.7 billion, resulting in an export coverage ratio of just 13%. By the first 10 months of 2025, exports fell to $898 million, while imports surged to over $8.4 billion, pushing the ratio down to 11%.

Electronics, automotive components, machinery, batteries, and semiconductors dominate this import flow, underscoring Turkey’s structural reliance on advanced manufacturing inputs.

A similar pattern emerges in trade with EFTA countries, particularly Switzerland. Since Switzerland’s inclusion, the balance has deteriorated steadily. In the first 10 months of 2025, Turkey exported $2.8 billion to EFTA members but imported $12.9 billion, bringing the coverage ratio down to 22%. Pharmaceuticals, chemicals, precision instruments, and luxury manufacturing products account for much of this gap.

Trade with Malaysia also highlights the issue. Exports totaled $524 million in 2025, while imports exceeded $4 billion, leaving the coverage ratio near 12% — little changed from five years earlier.

A Rare Success Story: The UK

Not all FTAs tell a negative story. The United Kingdom stands out as the most successful example of Turkey’s post-FTA trade strategy. Since 2015, Turkey has consistently generated growing trade surpluses with the UK. In 2025’s first ten months, exports reached $14.5 billion, compared with $6 billion in imports, lifting the export coverage ratio to 241%.

This performance reflects Turkey’s strength in medium-technology manufacturing, textiles, automotive products, and white goods — sectors where it competes effectively in advanced markets.

Structural Warning for Trade Policy

The decade-long trend shows that FTAs are not inherently harmful, but their outcomes depend heavily on sectoral composition and technological depth. Turkey’s agreements with high-tech economies have amplified import dependency, while those with developing or regional partners continue to generate surpluses.