Turkey’s foreign trade deficit improves month after month. The gap was down 30 percent year-on-year in June to $7.18 billion. A $1.3 billion of gold purchase from Iran plays a role in improvement
Turkey’s exports jumped 16.9 percent year-on-year in June as imports fell slightly.
Turkey’s foreign trade deficit, often seen as a structural problem of the Turkish economy and recently put in the international spotlight by rating agencies, continued to improve last month on the back of favorable April and May data.
A slowing domestic economy, declining oil prices and gold sales mostly to Iran
supported the improvement in the deficit.
“Exports in June marked the highest monthly exports to date,” Economy Minister Zafer Çağlayan said yesterday.
Exports in June increased by 16.9 percent reaching $13.2 billion compared with the same month last year, while imports were down 5.4 percent to $20.4 billion, according to tentative data released by the Turkish Statistical Institute (TÜİK).
Foreign trade deficit plunged 30 percent to $7.18 billion from $10.25 billion. The deficit contracted 27.3 percent in April and 15.5 percent in May.
“We continue to foresee that in the absence of a severe recession the improvement in external balances will continue, but be more gradual,” Özgür Altuğ, the chief economist at the BGC Partners in Turkey, said yesterday.
According to year-on-year calendar adjusted data, imports decreased by 1.5 percent in June, while the figure for exports was the same at 16.9 percent of increase. In the first six months of the year, foreign trade deficit reached $42.8 billion posting a 21 percent year-on-year decline. June data showed the 12-month cumulative deficit dropped to $94.6 billion from $97.7 billion. Monthly trade deficit, excluding gold and energy, decreased from $4.7 billion in May to $2.7 billion in June. Imports, excluding gold and energy, decreased from $15.9 billion in May to $14.1 billion.Gold-hungry Iran
Turkey’s overall exports to the Islamic republic shot up by 471 percent reaching nearly $1.6 billion thanks mainly to gold sales. Precious metal and stone sales skyrocketed by nearly 693 percent year-on-year to $1.6 billion in June, $1.3 billion which were sold only to Iran. In the first six month of the year total precious metal and stone sales amounted to $6.77 billion expanding 318 percent compared with the same period last year. Iran
took the lion’s share with $4.4 billion of purchases alone.
Iran, which is under growing economic and financial sanctions, has found it harder to execute international payments via the international banking system, resulting in payments made with gold. Iranians have also demanded increasingly more gold as a hedge against inflation.
Excluding precious metal sales to Iran, increase in Turkey’s exports in June would be only 5.4 percent year-on-year.
Export-import coverage ratio increased to 64.9 percent from 52.5 percent in June 2011. The figure was 60 percent in May and 66 percent in April.
Exports to the European Union, the main trading partner, dropped 10 percent last month in an annual comparison as ongoing European economic woes continue to hamper demand. “The proportion of the EU countries was 37.1 percent in June 2012 while it was 48.2 percent in June 2011,” TÜİK’s report said.
Turkish exporters have offset the shrinking market in Europe
with a diversifying exports market that is turning mainly toward Middle Eastern and African markets. Exports to Africa rose 3 percent and exports to the Middle East were up by 79 percent with exports to Iran, Iraq, Egypt, Libya and Saudi Arabia booming.