Turkey: Trade deficit surprised to the downside

Turkey: Trade deficit surprised to the downside

At USD 5.5bn, October’s foreign trade deficit was lower than the market expectations (USD 8.2bn) and our forecast (USD 7.4bn) mostly due to lower-than-expected imports. October’s fiscal data was implying an increase in imports. Nevertheless, on a seasonally adjusted basis, imports contracted by 4.1% m/m in October. Exports increased by 0.7% m/m. As a result, 12-month cumulative trade deficit declined from USD 87.7bn in September to USD 85.2bn in October. Similarly, non-energy trade deficit contracted by USD 2.2bn to USD 33.2bn in October.

Gold exports continued in October as well. Net gold exports in October were USD 1.0bn, bringing 12-month cumulative net gold exports to USD 5.2bn. The destination for almost half of the gold exports was Switzerland in October, whereas USD 0.5bn of gold was exported to the UAE. In the earlier months, gold exports were almost entirely either to Iran or to UAE.

Exports to EU increased from USD 5.1bn in September to USD 5.3bn in October, but this is mostly due to an increase in gold exports as noted above. Non-gold exports to MENA remained broadly flat at USD 2.5bn.

Despite a pickup in consumer credit growth, imports painted a benign picture in October, signalling a gradual increase in domestic demand. Following today’s data, we revised our current account deficit forecast down to USD 55bn, or 6.8% of GDP for 2012.

Selim Çakır