Turkish Trade Deficit Narrows to $6.8 Billion in September

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Researched by Industrial Info Resources (Sugar Land, Texas)--Turkey's foreign trade deficit continued to narrow in September, with the resilient exports and slowing demand for imports. According to figures from Turkish Statistical Institute (TURKSTAT), Turkey posted a foreign trade deficit of $6.8 billion in September, above the market consensus of $6.1 billion. Seasonally adjusted exports declined 6.8% from the previous month, while imports surged 4.1%.

The fall in gold exports was the main reason behind the negative surprise. "Excluding gold, the core deficit continued shrinking at a fast pace," said Yarkin Cebeci, a senior economist at JP Morgan in Istanbul. "Excluding gold, exports were up 9% over the previous year, while imports were down 2% in September."

"The continued strength in exports mainly reflects the success of the Turkish exporters in diversifying away from slow-growing Europe to higher-growth regions, while weak import data shows that the recovery in domestic demand is slow," he said.

Monthly gold exports fell sharply to $1.4 billion in September, from $2.1 billion in August. The importance of the European Union (EU) in Turkish exports continued to fade as exports to non-EU countries rose 33% year-over-year in September. Especially worth noting is that exports to Iraq were up 34%, Egypt 40% and Saudi Arabia 41%. This shows that Turkey is benefitting from the Arab spring. Iraq has now become Turkey's second-largest export market after Germany. For more information on exports, see September 5, 2012, article - Turkey's Trade Deficit Narrows to $7.9 in July.

"While the increase in gold exports contributed to the narrowing of the external deficits, there was some significant rebalancing, even when gold exports were omitted%," said Ilker Domac, an economist at Citibank in Istanbul. "12-month trailing current account deficit fell from $77.1 billion (10% of gross domestic product [GDP]) to an expected $56 billion (7.2% of GDP) in the first nine months of the year. In the absence of gold trade, the improvement was less pronounced but still significant, to 7.6% of GDP from 9.4."

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