Trade gap remains high as gold imports increase

ISTANBUL - Hürriyet Daily News

Turkey’s foreign trade deficit expanded by 19 percent to $8.6 billion in June compared to a year ago, due to a remarkable fall in exports. Hürriyet photo

Turkey’s foreign trade deficit continued to widen in June, driven by the ongoing rise in gold imports and the fall in exports, but it remained below estimations thanks to the drop in energy imports.

The country’s trade deficit expanded by 19 percent to $8.6 billion in June compared to a year ago, according to the Turkish Statistical Institute’s foreign trade data released on July 31.

While exports dropped 6 percent in one year, to $12.4 billion, imports contributed to a widening of the gap with a 2.8 percent rise. The country’s imports amounted to $21 billion in June.

Economy Minister Zafer Çağlayan claimed that the slowdown in export growth reflected the slowdown in Turkey’s current export markets, rather than the deterioration in exporters’ performance.“The developments in foreign trade in 2013 are not a surprise for us. We were expecting this year to be a hard one for the entire world, and it has been so,” he said.

Soaring gold imports are the main reason behind Turkey’s widening trade deficit. As the gold imports jumped by 51.8 percent, reaching $2.1 billion in June. Gold imports broke the national record for the first half of the year, with the first six-month’s total gold imports skyrocketing by 141 percent and climbing to the historic high level of $9.9 billion. Turkey’s gold imports were realized at only $4.1 billion in the same period of last year. The first half’s gold imports in 2013 therefore appeared to be equal to the amount of gold imported between 2007 and 2012.The drop in gold prices since the beginning of this year is the main reason behind the Central Bank’s rush to gold purchases, analysts say.

Rise in exports to Europe

The June trade data also revealed a slight pick up in Turkey’s exports to the European Union, which is the top priority market for local firms as it accounts for nearly half of the goods sent abroad. Exports to the EU were $5.1 billion in June, raising the share of the 17-nation bloc within Turkey’s exports markets to 41.6 percent, from last year’s June percentage of 37.1.

Çağlayan said the contraction in eurozone persisted, despite the slight recovery seen in the figures, while praising the performance of Turkish exporters in raising their presence in new markets as well as operating in the existing ones. Meanwhile, the list of top countries receiving Turkish goods didn’t change in June. Germany ranked first with $1.1 billion worth of imports from Turkey.