Turkey's Trade Deficit Falls to $7.2 Billion, with Surging Gold Exports

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Researched by Industrial Info Resources (Sugar Land, Texas)--Turkey's trade deficit narrowed in June from May, helped by a surge in gold exports and a drop in imports due to a stalling economy. According to trade figures released by the Turkish Statistical Institute (TURKSTAT), the trade deficit fell to $7.2 billion in June, from $8.2 billion in May. On an annual basis, imports contracted 5.4% to $20.4 billion, while the exports climbed 17% to $13.3 billion in June.

Turkey is trying to diversify trade away from the crisis-hit European Union (E.U.). Turkish exports to the E.U. slid to 37% of total exports as of June from 48% a year ago, the institute said.

"Turkish exporters have been successful in diversifying their markets to higher-growth regions. Turkey is benefitting from the results of the Arab spring," said Yarkin Cebeci, the chief economist of JP Morgan Chase in Istanbul. The exports to Iraq were up 37%, Egypt 50%, Libya 272%, and Saudi Arabia 30.8%. Iraq has now become Turkey's second-largest export market after Germany.

Gold Exports Surge

According to figures, exports of the gold and precious metals in June alone were $1.62 billion, beating all other items, including cars and spare parts exports, which were $1.32 billion. In first half of this year, the exports of gold and precious metals fourfold to $6.77 billion against a drop of less than 0.1% for cars to $8 billion, a rise of 6.2% for steel and an increase of 19% in electrical machinery.

On a separate report, the statistics agency said that it had no evidence that exports to Iran were payments for oil or gas. Turkey is not exporting gold to Iran in order to pay for items such as oil or natural gas, Turkish Energy Minister Taner Yildiz said in to Bloomberg News on July 9 in Ankara.

The Central Bank of Turkey has tightened monetary policy since October to control a surge in consumer demand for imported goods. The current account deficit widened to $77 billion, or 10% of gross domestic product (GDP) last year. In May, the deficit fell to 8.5%, or $67 billion.

"We expect continued adjustment in trade dynamics and maintain our current account deficit forecast for the year at 7.2% of GDP," said Cem Akyurek, chief economist for Deutsche Bank in Istanbul.

The Turkish economy grew more strongly than expected in the first quarter of 2012, with an annual rate of 3.2%. The Turkish energy sector grew 8.4% in the first quarter, while the manufacturing sector improved just 2.7% in the same period. For additional information, see July 6, 2012, article - Turkish Economy Beats Forecasts in First-Quarter 2012 with 3.2% Annual Growth Rate.

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