Turkey: Gold export story reaches an end

Turkey: Gold export story reaches an end

At USD 7.3 bn, January’s foreign trade deficit was slightly above the market expectations (USD 7.0bn). As a result, 12-month cumulative trade deficit increased to USD 84.2bn in January from USD 84.0bn in December. Similarly, 12-month cumulative non-energy trade deficit increased to USD 31.9bn from USD 31.6bn. On a seasonally adjusted basis, exports and imports increased by 2% m/m and 9% m/m, respectively. Imports excluding gold and energy rose by 6% m/m on a seasonally adjusted basis, according to our calculations. On a 3m/3m basis, imports increased for the first time since August 2012, signalling that the monetary easing of the CBRT has finally reflected on import figures. Based on broad economic categories, imports of consumption goods increased 7.6% y/y, intermediate goods by 3.4% y/y, and capital goods by 8.2% y/y.

Turkey returned to its net gold importer position in February after being a net gold exporter for the most part in 2012. In January, gold exports were USD 465mn and gold imports were USD 698mn. During 2012, the contribution of net gold exports to trade balance amounted to USD 5.7bn. Exports to EU increased by 7.2% y/y, whereas exports to Near and Middle Eastern countries rose 16% y/y. Germany regained the top export market position again after being snatched by Iraq for the first time in history last month.

January trade data showed that gold export story of Turkey is reversing its course. Local gold prices are above the global prices, hence we are likely to see Turkey as a net gold importer again in February. This, accompanied with an expected increase in imports due to stronger domestic demand will lead to a widening in the current account deficit in the coming months. Yet, the deterioration is likely to be gradual, and we expect current account deficit to be around 7% of GDP this year.

Emre Tekmen

Nazlı Karamollaoğlu