Forecasting of Turkey's apparel exports using artificial neural network autoregressive models

Abstract

Foreign trade is significant for open economies and has a critical place in the development of national economies in a globally competitive environment. Export has a key role as an important component in foreign trade transactions. In this study, Turkey's exports of HS-61 “Apparel and clothing accessories knitted or crocheted” and HS-62 “Apparel and clothing accessories not knitted or crocheted” products were examined. Turkey's exports of these HS codes to seven countries, which are mostly exported, EU27, OECD and the world were estimated for 2020–2025 using artificial neural networks (ANNs). The model was validated by measuring forecast errors (RMSE, MAE, and MAPE) to ensure that the model can recreate satisfactory results. The results reveal that the ANNs predicted the exports to the selected countries accurately. According to the findings from the NNAR (1,1) model, Turkey's exports of HS-61 coded products to Italy, the UK, France and EU-27 are expected to increase year-on-year from 2020 to 2025, while exports to the USA, Netherlands and Spain are expected to decrease. Exports from Turkey to Germany, the world and the OECD are projected to decrease first and then increase. In the NNAR (2,2) model, Turkey's exports to Italy, the UK and France are expected to increase year on year, while exports to other countries are generally estimated to decrease first and then increase. In the estimation made for the HS-62 product group with NNAR (1,1) model, it is predicted that TURKEY’s exports to Italy, the USA, the UK, France and Spain will increase year by year from 2020 to 2025. It is estimated that TURKEY's exports to the Netherlands, Germany, World, OECD and EU-27 will decrease year by year in the same period. In the NNAR (2,2) model, it is predicted that TURKEY's exports to UK, France and Spain will increase year by year, while exports to EU-27, OECD and World will decrease. However, TURKEY's HS-62 exports to Italy, the USA, the Netherlands and Germany are expected to follow a fluctuating course.