Turkey’s foreign trade deficit rose by 18.7% y/y to USD 99.78bn last year, the statistics institute (TUIK) said on Friday.

This deficit was slightly higher than the government estimate of USD 98bn and above the market consensus estimate of USD 97.8bn (Reuters poll). Turkey’s foreign trade shortfall was a record USD 105.9bn in 2011.

Turkey’s exports fell 0.4% y/y to USD 151.9bn while imports rose 6.4% y/y to USD 251.7bn last year.

In December alone, the foreign trade deficit jumped 37.3% y/y to USD 9.92bn, exceeding the market forecast of USD 7.9bn. Exports amounted to USD 13.2bn (market forecast: USD 13.4bn), translating into a rise of 4.9% y/y while imports soared 16.7% y/y to USD 23.14bn (market forecast: USD 21.3bn).

The calendar adjusted exports rose 4.9% y/y in December, imports recorded a rise of 12.5% y/y. The seasonally & calendar adjusted exports were down 2.3% m/m and adjusted imports rose 1.9% m/m.

Consumer goods and intermediate goods imports rose 18.1% y/y and 17.7% y/y in December while the import of capital goods increased 13% y/y. In the whole of 2013, Turkey imported USD 30.4bn worth of consumer goods, representing a 13.9% y/y increase and it paid a total of USD 183.8bn to import intermediate goods, a 5.1% y/y increase.

Energy imports rose 1.5% y/y in December to USD 5.2bn while in the whole of 2013 this item was down 7% y/y to USD 55.9bn. The strong trend in precious metals imports (mostly gold) continued and their imports jumped 301.5% y/y to USD 1.5bn in December while precious metal exports declined sharply by 59.7% y/y to USD 317mn. In the whole of 2013, precious metal imports rose 90.2% y/y to USD 16.2bn but exports fell 57.3% y/y to USD 7bn.

Turkey’s exports to the EU increased by 6.6% y/y to USD 5.3bn in December and shipments to the Block rose 6.2% y/y in the whole of 2013 to USD 63.1bn. The EU was still Turkey’s largest export market with a 41.5% share in total exports in 2013. TUIK data also show that exports to the Middle East were down 16.1% y/y last year to USD 35.6bn, representing a 23.4% share in total while shipments to Africa rose 6% y/y to USD 14bn (9.3% share in total).

Strong domestic demand, as the consumer goods import figures reflect, was one of the main sources of the last year’s foreign trade deficit. The government has taken several measures to curb domestic demand which may help reduce the trade shortfall this year while a weaker TRY should support exports but the latter largely depends on the economic revival in the EU. The government expects foreign trade deficit to decline to USD 95.5bn this year. If TRY remains weak throughout the year, this will undermine both consumer and business demand (meaning slower economic growth) which will result into less consumption/business activity and narrower foreign trade.