Turkey’s foreign trade shortfall widened by 6% y/y to stand at $7.76bn in May, national statistics office TUIK reported on June 29.

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

“Pace of deterioration just looks like it is beginning to slow/turn... somewhat encouraging,” Timothy Ash of Bluebay Asset Management said in comments on the latest foreign trade data in a note.

“Also good to see Cemil Ertem [a top economic advisor to Turkish President Recep Tayyip Erdogan] talking about Turkey experiencing a soft landing - I disagree with him, but if he thinks that then the new administration will be under less pressure to fiscally pump prime. He even paid a sop to an independent central bank/inflation targeting,” Ash also said.

Also according to the TUIK data, the foreign trade deficit grew 41% y/y to $35bn in January-May.

Exports were up 8% y/y to $69bn in the first five months of 2018 but imports rose at the higher pace of 17% y/y to reach $105bn.

May's foreign trade figures suggest an initial 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 a contraction in April and May.

Rising international concerns over a global trade war, meanwhile, are domestically generating anxieties of a major showdown that would negatively affect Turkey’s foreign trade performance.

Fears 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.

Turkey’s current account deficit rose by 80% y/y to $21.8bn in January-April, the central bank announced on June 11.

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 quicker 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.