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source: tuik, trade ministry
Turkey’s trade deficit, based on the special trade system which excludes re-exports through free economic zones, jumped by 119% m/m to $6.42bn in August, trade ministry data showed on September 2.
Imports rose by only $989mn m/m to $18.2bn but exports slumped by $2.5bn m/m to $11.8bn.
Turkey’s economic policy since the beginning of the coronavirus (COVID-19) pandemic has made the country an outlier. The external balances of its peers have seen recoveries.
The export shock in August was caused by demand contraction in the EU—Turkey’s largest export market, accounting for almost half of the country’s exports—while the decline in automotive exports was responsible for 36% of the overall export decline, Trade Minister Ruhsar Pekcan said.
The August trade data also showed a huge jump in gold imports, which climbed to $4.16bn from $2.07bn in July and $2.38bn in June.
Turkey’s money supply growth outpaced that of its peers and it burnt through the highest amounts of international reserves to stabilise its currency.
Gold demand may continue in September as the USD/TRY rate is still breaking consecutive records and taxes have pushed Turks to physical gold and FX.
Turkey hiked taxes on most imported cars in a move designed to lessen the trade slump and deficit attributed to the coronavirus (COVID-19) crisis. The tax changes were announced in a presidential decree published in the Official Gazette on August 30.
Turkey has brought in a series of tax increases since the beginning of the COVID-19 pandemic to discourage imports.
The global economic impact of the health and economic emergency has hit Turkey’s main export markets such as Germany and other countries in the European Union hard. Turkey’s international tourism industry, a key economic segment as it brings in hard currency, has been almost destroyed this year by coronavirus effects.
Turkey posted its seventh straight current-account deficit in June. Year-to-date car imports totalled $5.2bn, up 16% from 2019.
24 TURKEY Country Report October 2020 www.intellinews.com
