Turkey’s foreign trade gap narrowed 0.6% y/y to USD 7.15bn in November.

November deficit came as a surprise as the markets had expected a foreign trade deficit of USD 7.7bn (Reuters poll). Foreign trade deficit rose by 16.8% y/y to USD 89.8bn in January-November, data of the statistics institute (TUIK) also showed.

Exports, which had fallen 8.5% y/y in October, rose 3.6% y/y to USD 14.25bn while the rate of import growth slowed to 2.2% y/y to USD 21.4bn in November from 32.5% y/y in the previous month.

On a seasonally & calendar adjusted basis exports rose by 4% m/m while imports fell 0.9% m/m. The calendar adjusted exports and imports rose 3.4% y/y and 6% y/y, respectively in November.

Consumer goods imports (13% share in total) increased 9.8% y/y and intermediate goods imports (72% share in total imports) registered a 1% y/y increase which suggests a slowdown in economic activity.

Turkey’s exports to the EU rose 8.7% y/y to USD 6.29bn and the Block’s share in Turkey’s exports increased to 44.1% in November from 42% a year ago. Exports to the Middle East (a 22.9% share in total) fell 3.8% y/y in the month while shipments to the Americas (a 5.1% in total) declined 7.5% y/y.

Turkey’s energy imports dropped 10.4% y/y to USD 4.78bn in November and the country’s energy import bill stood at USD 50.7bn in the first eleven months of the year, representing a 7.8% y/y decline. Precious metals imports (gold), which has been one of the main drivers of Turkey’s current account deficit, soared 116.1% y/y to USD 996mn while their exports shrank 61.7% y/y to USD 461mn.

If consumer loan growth remains strong this will lead to wider current account deficit and the weakness in TRY will also be decisive going forward. TUIK data showed that consumer goods imports rose 9.8% y/y in November versus 8.4% y/y increase in October.