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Commerzbank’s Tatha Ghose analyses Turkey’s June trade figures, highlighting a 26.2% year-on-year widening of the trade deficit to USD 10.4 billion. While exports and imports both rebounded after May’s holiday distortions, imports are running stronger than exports. Ghose stresses that the trade deficit remains around 6% of GDP, underscoring persistent balance of payments vulnerabilities.
Deficit, imports and balance of payments
“Turkey’s latest trade data for June showed the external trade deficit widening by 26.2%y/y to USD 10.4bn. Exports rose by 21.7%y/y to US$24.9bn, while imports increased slightly faster, up by 23.0%y/y to US$35.3bn. On the surface, this appeared to confirm a strong month for trade, although at the cost of some worsening of the trade balance.”
“But these headline figures are misleading. They partly reflect the reversal of holiday-related distortions in May, and the year-on-year comparison says little about the latest incremental trend. On a seasonally-adjusted basis, both exports and imports recovered after dipping in May (as the situation slightly stabilised in the Middle East). This means that the June data should not be read as a simple story of recovering trade volumes; if anything imports are running stronger than exports.”
“The composition of imports gives the same message. Intermediate goods imports were up by 30.0%y/y and capital goods imports by 19.6%y/y, while consumer goods imports were lower by 1.2%y/y. This supports the idea of risk aversion, with consumer confidence deteriorating while industry wanted to stock up rapidly on raw materials.”
“The data were not surprising, but they highlight the adverse condition of Turkey’s balance of payments despite years of attempted monetary tightening to try and correct macroeconomic imbalances such as the current-account gap.”
“These monthly details aside, overall, it is not a comforting picture: as far as the trade deficit is concerned, it has been more or less flat at around 6% of GDP in recent months. The deficit has not been improving in any convincing underlying sense.”
