Turkey’s foreign trade shortfall increased by only 5% y/y to $7.72bn in May after widening alarmingly across the first four months of 2018, preliminary data from the customs ministry showed on June 4.

Annual growth in exports fell to 5.57% in the month from 9% y/y in April while import growth declined to 5.49% from 15% y/y - the figures amount to an initial sign of a desired adjustment caused by the stark depreciation of the Turkish lira, down towards 20% against the dollar in the year to date. However, it should be noted that the manufacturing PMI index for Turkey pointed to contraction in April and May.

Imports of consumer goods fell by 10% y/y to $2.34bn in May.

On the back of the May data, the foreign trade deficit widened 41% y/y to $35bn for January-May. Exports increased by 8% y/y to $69bn and imports were up 17% y/y to $104.5bn.

Anxieties over Turkey's overheating economy have strengthened over the sucking in of imports caused by the credit-fuelled economy. Turkey has one of the worst current account deficits in the world. Together, the May data on foreign trade and the PMI figures could be straws in the wind evidencing a slowdown in economic activity.

Turkey's economic health is dangerously reliant on hot inflows of foreign external financing to enable growth. The political and economic outlook in the country is not secure enough to attract sufficient longer-term stable foreign investment capital.

The foreign trade deficit rose by 37% y/y to $77bn in 2017. Exports were up 10% y/y to $157bn but imports rose at the faster pace of 18% y/y to reach $234bn.

The government is forecasting a foreign trade deficit of $68bn for 2018 with exports reaching $169bn and imports amounting to $237bn.