Turkey is set to see another record year for exports, Economy Minister Zafer Caglayan insisted on March 1, as concerns over the current account deficit start to rise once more.
Assessing an increase of 5.6% year on year in exports in February, the minister stressed that Turkey's record-breaking performance in 2012 is likely to be repeated this year. Discussing figures released by the Turkish Exporters' Assembly (TIM), Caglayan said exports grew to a total of $11.6bn last month, helping exports over the last 12 months to total $153.6bn.
As has been the case with many other emerging economies in Central and Eastern Europe that have managed to escape recession thus far through the latest crisis, Turkey has its carmakers to thank for much of the improvement. With an increase of 9.2% in exports, the automotive sector was ranked as first in February export report, the official highlighted. Germany, with $1.07bn is the country's top export destination followed by Iraq on $844m.
A strong export year is vital as the Turkish economy recovers from the dip in growth it saw in 2012. Improving performance already has the central bank worrying about rapid credit growth feeding domestic demand. That threatens to boost imports and worsen a current account deficit that Ankara worked extremely hard to push down to around 6% last year.
A year ago, that deficit was above 10% following economic expansion of 8.5% in 2011. The imbalance is the major element preventing Turkey from improving its credit rating and lowering its borrowing costs. The rating agencies point out that it leaves the country heavily exposed to any shocks for the Eurozone's vulnerable banks, which provide the bulk of the financing to cover the deficit.
However, Turkey will be hard pressed to match last year's export performance as its gold exports to Iran - a channel by which Turkey was sidestepping US sanctions against buying gas - have now been all but halted. Meanwhile, Turkey still needs to import huge volumes of energy to power its developing economy, which is the major contributor to the growing current account deficit.
Still, as analysts at Erste Bank point out, the figures for February don't include gold, suggesting Ankara can still ensure it hits a strong expansion in export figures by leaving the yellow metal to one side in its data.
"The year-on-year increase in the January-February period has become 5%," Erste writes. "Note that this figure does not include gold exports and the official export data disclosed by TURKTSTA may differ depending on gold exports. In line with the recovery in domestic demand, we estimate the imports to start growing year on year again this year. Therefore, the ongoing expansion in exports would fail to prevent a widening in the trade deficit."
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