Rising oil prices hurt foreign trade balance
ISTANBUL-Hürriyet Daily News
If the increase in oil prices continues, this will become one of the most important risks facing the foreign trade balance in the coming period, says Vakıfbank in a note to investors.Turkey’s foreign trade deficit narrowed 4.7 percent from $7.3 billion to $7.09 billion in January 2012 from January 2011, according to data released yesterday by the Turkish Statistical Institute (TÜİK).
The $7.09 billion figure, however, exceeded the $6.3 billion market expectation due to the increase in oil prices, as well as an increase in the imports of investment goods and intermediate goods in January, according to a note released yesterday by Vakıfbank.
BGC Partners Chief Economist Özgür Altuğ also said in his note to investors that the pick-up in Turkey’s foreign trade was not as positive as expected.
“Even if this is just a one-month reading, the 12-month data released in November shows that the improvement in Turkey’s foreign trade deficit and, as a result, the current account deficit, has slowed down; this is discouraging,” he said, adding that barring a recession, the improvement in Turkey’s external balances would occur, albeit at a slow pace. Turkey’s foreign trade witnessed an increase both on the import and export side year-on-year, according to the data. Exports increased 8.6 percent year-over-year, reaching $10.3 billion from $9.5 billion, while imports also rose 2.8 percent year-over-year, rising from $16.9 billion in January 2011 to $17.3 billion. Energy imports in January were up 24.8 percent from January 2011, exceeding $4.7 billion, making it the sector with the most imports.
“The recent increase in petrol prices will lead to an even greater increase in Turkey’s imports data in the coming months,” read a statement released yesterday by Vakıfbank. “And if the increase in petrol prices becomes permanent, this is one of the most important risks that we face in the coming period.”
The second most imported items after energy imports were boilers, machinery, and mechanical items at $1.7 billion. In third place were imports of iron and steel at $1.5 billion.
The most interesting trend to note, according to Vakifbank’s report, was the 6 percent increase in the import of investment goods used in production in January as investment goods imports had witnessed a drop in the last quarter of 2011.
Consumer good imports, meanwhile, were down 20.3 percent. Imports that witnessed a drop year-over-year were pearls and precious and semi-precious stones; cotton; motorized land vehicles like tractors and bikes; as well as pharmaceutical items. Meanwhile, Turkey exported the most to Germany, Iraq, the United Kingdom, Italy and France in January. In terms of imports, the top three countries sending products to Turkey in January were Russia, China and Germany.