Gold sales to Switzerland cut Turkey’s trade gap

ANKARA

AA Photo

Gold sales to Switzerland have once again helped Turkey narrow its trade gap, this time dramatically to $4.96 billion in April from $7.3 billion for the same month the previous year, according to figures released by the Turkish Statistical Institute (TÜİK) on May 29.      

The 31.9 percent decline followed an increase of 17.2 percent in March.

The institute valued April exports at $13.4 billion, a 0.2 percent increase year-on-year, while imports were down to $18.4 billion with an 11.1 percent decline.

The country’s exports to the EU, Turkey’s main trading partner, declined by 10.4 percent in April to $5.3 billion.

Switzerland was the main export destination for Turkey in April as the European country bought $1.25 billion worth of goods from the country, some $1.24 billion of which was in gold. 

Some 80 percent of the $1.43 billion gold exports from Turkey was directed to Switzerland. The United Arab Emirates followed by buying almost all of the remaining amount. 

Gold sales jumped 27-fold in April from the same month in 2014, according to a Bloomberg calculation. 

Turkey’s foreign trade deficit narrowed in January to $4.31 billion, a 37.5 percent decrease from the same month of the previous year, due to the decrease in oil prices and the rise in gold exports, mainly to Switzerland. 

The top country for Turkey’s imports was China at $1.9 billion. “The figure is above estimates. But it was close and we are on the verge of elections which markets tend to avoid sharp moves. That’s why market reaction is limited,” said Adnan Çekcen, a financial analyst at Destek Securities in Istanbul, while commenting on the trade balance figures. 

“After March, in which we saw a 14.4 percent decrease, there was a 0.2 percent increase in exports. This is important because at least it showed that decline in exports halted. Besides, imports showed a decline at 11.2 percent while it was down near 6 percent in March,” Çekcen said. “Many authorities expected a slide in value of Turkish Lira would support our exports but we see it did not come out as expected. This indicates that weak foreign demand, as it was repeatedly pointed by the Turkey’s Central Bank, adversely affected exports.”

Çekcen noted that Turkey’s exports performance was prone to be affected by geopolitical tensions, especially in its neighbors and trade partners much more than the competitive level of the lira against other currencies.