Contraction in Turkey’s foreign trade gap races to 77% y/y in September

Contraction in Turkey’s foreign trade gap races to 77% y/y in September
By bne IntelliNews October 1, 2018

Turkey’s foreign trade deficit plunged by 77% y/y to $1.89bn in September after falling 59% y/y in Augustpreliminary data from the customs ministry showed on October 1.

An initial sign of the rebalancing to come amid Turkey’s economic turmoil—the country is mired in a currency collapse that threatens to bring about a banking crisis, and a recession appears to be setting in—emerged in May when growth in the year on year foreign trade gap fell sharply to 6% given the fast depreciation experienced by the Turkish lira (TRY) during the month. Prior to that, the trade deficit widened alarmingly across the first four months of this year when Turkey was still experiencing credit-fuelled economic growth running at ‘warp speed’.

The first contraction seen in the trade shortfall for a year, measured at 9% y/y, was recorded in June. Subsequently, the July data brought an acceleration in the pace of the rebalancing seen in the Turkish economy with the trade deficit shrinking by 32.5% y/y.

The latest trade data from the customs ministry also showed that exports rose by 23% y/y to $14.5bn in September while imports fell 18% y/y to $16.4bn on weak domestic demand.

Imports of consumer goods fell by 41% y/y to $1.39bn in September while intermediate goods imports fell 14% y/y to $12.9bn and capital goods imports declined by 26% y/y to $2bn.

On the back of the September data, the accumulated foreign trade deficit in 2018 contracted for the first time this year, shrinking by 5% y/y to $51bn for January-August. Exports increased by 7% y/y to $123bn and imports were up 3% y/y to $174bn.

The foreign trade gap 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 $66bn for 2018 (its previous forecast was for $68bn) with exports reaching $170bn (previous forecast $169bn) and imports amounting to $236bn (previous forecast $237bn), according to the latest medium term economic programme.

The government also forecasts that the average Brent oil price will be $72.8 per barrel in 2018, driving Turkey’s energy imports bill to $46bn from $37.2bn in 2017.

Data

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