Record gold import hits Turkey’s trade balance

ANKARA

Turkey’s exports totaled $151.87 in 2013, falling 1 percent below the record level of 2012, while imports surged by 6.4 percent to $251.65 billlion, resulting in a $99.78 billion foreign trade deficit at the end of 2013. DHA photo

urkey’s foreign trade deficit rose to $99.78 billion last year, marking an 18.7 percent rise from 2012, with the impact of record gold imports that jumped by over 150 percent over the year.

According to data announced by the Turkish Statistical Institute (TÜİK) on Jan. 31, the country’s foreign trade gap jumped by 37.3 percent to $9.92 billion in December. This marked an increase higher than market expectations, which had been around $7.9 billion for the month.

Accounting for a considerable portion of the deficit, Turkey’s gold imports last year boomed by 150 percent to reach a record level of 302.3 tons that worth $16 billion, as Ankara continued paying for Iranian natural gas and oil imports with the Turkish Lira and Tehran used deposits held in Turkey’s state-run Halkbank to buy gold. 

Some of the gold was held inside Turkey at the peak of the trade while some was taken to Dubai by couriers to be sold for foreign currency, which was urgently needed by Iran as sanctions have increasingly cut off access.

Overall exports at the end of 2013 amounted to $151.87, almost reaching the record level of 2012. Imports surged by 6.4 percent to $251.65 billion. The government had forecasted the deficit to be $98 billion at the end of 2013 in its medium-term program, while predicting exports at $153.5 billion.

Early demand raises imports

Meanwhile, the country’s overall exports advanced 4.9 percent to $13.22 billion in December, while imports soared 16.7 percent to reach $23.14 billion, the data also showed.

The unexpectedly sharp rise in the gap stemmed from the recent weakening of the Turkish Lira as well as new restrictions on installment payments in a number of sectors, which is expected to curb domestic demand, analysts say, suggesting that this indicates the rise is a one-time exception. 

Domestic consumers boosted their demand for products to avoid new measures to curb consumer loans and the use of credit cards to pay for goods by monthly installments. The regulations introduced in the hope of restricting the country’s growing inflation and current account deficit will go affect as of Feb. 1. 

“We think that the acceleration in imports in December was affected by the pull of the demand to earlier,” Odeabank said, in a note released issued after the announcement of the foreign trade data on Jan. 31. 

“It looks like the sharp rise in imports caused the foreign trade deficit data which came remarkably over expectations,” said HSBC senior investment strategist Ali Çakıroğlu, adding that the latest currency developments and the fall in demand after escalating uncertainty may also have led to the import surge. 

Gold imports throughout the month also multiplied by over 300 percent, fueling the increase in the deficit.