Are Textiles Leaving Turkey ?

Turkish textile industry has witnessed a significant growth recently while passing through sharp contractions. The rising trend exhibited with pandemic in 2019 replaced by a serious revision period in 2023 and 2024. However, the year 2025 comes into exhibits as a new year of balance. In this concept, one of the most frequent topics about the current outlook of the sector highlighted as ‘’Are Textiles Leaving Turkey ?’’ which evaluated by the field analysis and associated figures.

Huge Leap Following Pandemic

The disruptions in global supply chains in 2020 made it clear Turkey's high-rank in textile production due to its proximity to European and US markets. During this period, the textile sector attracted attention with the following figures:

• Textile raw material exports: A 40% growth increase from $7.1 billion to $10.2 billion in a year.

• Ready-made clothing and apparel: Over 30% increase from $17 billion to $22.2 billion.

• Carpet sector: A 34% growth increase from $2 billion to $2.75 billion.

In parallel with this growth, the sector made very serious investments in machinery and technology. In response to the high demand, technology developers sold machines with their delivery after two years.

Explosion in Machinery Demand

Textile machinery sold to Turkey during this period virtually broke records.

• Leading European machinery manufacturers announced that orders received from Turkey shown an increase of over 100% compared to the previous year.

• Domestic and Chinese manufacturers also benefited from this wave of orders.

However, following critical developments in the post-pandemic period began to reverse this growth.

Chinese Competition and Shrinking Market

The normalization of the global economy following the pandemic has radically changed the supply-demand balance in the textile sector. While recession and rising inflation in major markets like the US and EU have affected consumption habits, Chinese companies on the other hand, which increased their production capacity during the pandemic, have significantly reduced the market share of Turkish textile manufacturers. Increasing inventory burden, the high interest-low exchange rate policy in the domestic market, and issues of accessing to financing have put the sector in a serious bottleneck. Companies, especially those making large investments, are struggling to survive under the pressure of the economic crisis.

The Major Issue of Turkish Textile Manufacturers: High Cost Pressure

One of the biggest structural problems facing the Turkish textile sector in recent years is rapidly increasing production costs. Labor costs undoubtedly at the top of the list. The labor-intensive structure of textile industry operates under a model that strives to compete through labor efficiency, particularly in the ready-made clothing and apparel sub-segments. However, this structure has come under significant pressure due to macroeconomic developments since 2020.

Pay Scale Have Increased, Competition Has Weakened

In 2020, the average textile worker in Turkey cost employers approximately $700, but by 2025, this figure will exceed $1,600. This increase stems not only from the increase in the nominal minimum wage, but also from indirect costs such as foreign exchange rate pressures, tax burdens, and Social Security Institution (SGK) premiums. This trend has rapidly taken away Turkey from competition with countries traditionally taken advantage by their cheap labor surplus.

Foreign Exchange Rate and Financing Policies Created Additional Pressure

Another issue accompanying high labor costs was the low foreign exchange rate-high interest rate policy. While low exchange rates suppressed the revenues of textile companies that depended on exports, high interest rates made accessing the financing needed for new investments nearly impossible. Many companies, facing disrupted cash flow and difficulty in maintaining production volume, began to consider the strategy of shifting production to new markets in this period.

The Trend of Investment Abroad: The Case of Egypt

Acting under these cost pressures, many Turkish ready-made clothing and apparel manufacturers have opted for establishing production facilities or outsourcing production in North African and South Asian countries, particularly to Egypt. Especially, Egypt has become a prominent destination for Turkish investors in recent years, and a major preference by its free zones, low labor costs, and advantageous export-oriented practices.

However, this transition has not been as smooth as it was anticipated. Many Turkish companies have failed to achieve the desired level of efficiency and sustainability in Egypt due to bureaucratic obstacles, differences in production discipline, logistic challenges, and security concerns. Some investors have even stepped back from their production capabilities which started around these regions and made their decision to return to Turkey.

Sustainable Solution: Value-Added Production

In light of these developments, it has become clear for industry stakeholders that competing solely on cost advantage is no longer considered to be sustainable. As a permanent solution to manage rising costs:

• Technical textile production,

• Smart fabrics and functional products,

• Branding and reaching directly to end consumer models,

• Digitalization and automation investments

are coming to the fore.

Despite the high cost structure, companies that develop an R&D and innovation-focused production model can sustain their presence in the global market and achieve higher profit margins with lower volumes.

What Happens Next?

From Crisis to Transformation: The Textile Sector Welcomes A New Beginning

Under the evaluation of last five years, we can clearly see that the Turkish textile sector has evolved from a period that began with the pandemic and witnessed a record growth in a short period of time, to a period of contraction in which it was forced to rationalize. The textile raw materials, ready-made clothing, and carpet sectors, which grew in between 30% and 40% in 2020 and 2021, began to recover from this "bubble growth" effect by 2023. While this decline regarded as a surprise to some, it was an expected revision for those closely involved in the sector.

Post-Pandemic Rational Transformation

Ready-made clothing and apparel exports fell from $22.2 billion in 2022 to $20.6 billion in 2023, a 7.3% decline, and then fell by 4.3% to $19.7 billion in 2024.

Textile raw material exports similarly contracted by 7.4% in 2023 and 4.3% in 2024, falling to $9.042 billion levels.

The carpet sector also suffered from this contraction, with exports falling from $8.7 billion to $8.1 billion.

The crisis period, long-awaited by the sector to reach its bottom for two years, seem to have a relative balance in 2025.

What 2025 Data Reveals?

Foreign trade figures for the first six months of 2025 reveal a re-stabilization trend in the sector:

• Textile raw material exports increased compared to the same period in 2024, rising from $4.616 billion to $4.737 billion.

• Ready-made clothing and apparel exports continued their downward trend, falling from $1.374 billion to $1.300 billion.

• Carpet exports fell from $8.688 billion to $8.125 billion.

This figure shows signs of recovery in some sub-segments of the sector, while others still continuing to experience contraction.

Transformation Begins in Textile Machinery

The machinery subsector is experiencing a remarkable development.

• In the first quarter of 2025, textile machinery exports increased by 13.8%, from $298 million to $339 million.

• During the same period, imports decreased from $553 million to $462 million, improving the sector's net foreign trade position.

This indicates the strengthening of domestic machinery manufacturers and a decrease in foreign dependency.

2025: A Year of Preparation, Not Recession

In light of all this data, 2025 is considered not a year of "recession" for the Turkish textile industry, but rather a year of preparation and restructuring. Companies are striving to make their production processes more efficient, optimize their costs, and transition to higher value-added production models while maintaining their current capacity.

Towards 2026: A Year of Hope and Strategy

The sector's leading players are planning 2026 as "rampant year." Companies that invest in innovative solutions, sustainable production models, and R&D are on their way to overcoming the crisis and increasing their competitiveness. It is predicted that businesses that successfully manage this process will not only survive but also continue to have a voice on a global scale.