Turkey’s foreign trade shortfall widened by 109% y/y to stand at a record high of $9.07bn in January, national statistics office TUIK reported on February 28.

Exports were up 11% y/y to $12.5bn but imports rose at the faster pace of 38% y/y to reach $21.5bn in the month.

Anxieties over Turkey's overheating economy are strengthening over growing imports and, as a result, current account deficits.

Timothy Ash, an analyst at BlueBay Asset Management, said of the the latest data: “Another poor number—a record for the month of January. [It] underscores the overheating story, [with] imports being hit out of the park.”

He added that more recorded substantial growth in imports of gold and precious gems and metals—364% y/y to $2.4bn—meant “either more Turkish couples are getting married (gold is typically a gift given for weddings in Turkish culture), or Turks are nervous about the future and are accumulating gold as an insurance mechanism, along with forex deposits.” The Turkish central bank, said Ash, “seems to have been building gold reserves in recent months—also perhaps [showing] concern therein over the international geopolitical setting.”

Turkey’s top export item in January was motor vehicles, with shipments totalling $1.8bn from $1.7bn a year earlier.

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.

Turkey's economic health is patently dangerously reliant on hot inflows of foreign external financing to enable growth. 

Despite all the worries of imbalances, Turkey continues to finance its current account deficit via portfolio inflows. The total equities inflow in 2017 topped $3.34bn, in line with the scope of portfolio inflows into the emerging markets universe. Consequently, the Istanbul bourse experienced many all-time highs last year.

There was an overall inflow of $7.13bn into debt securities in 2017.