Türkiye’s foreign trade deficit narrowed sharply in July from the previous year as exports surged amid a fall in imports, official data showed Wednesday.
The trade gap dropped by nearly 42% to $7.3 billion (TL 588.82 billion) last month from $12.5 billion a year ago, the Turkish Statistical Institute (TurkStat) said. In June, the shortfall was $5.9 billion.
In July, exports increased by 13.8% annually to $22.5 billion, while imports fell by 7.8% to $29.8 billion, the data showed.
The fall in the trade gap reflects progress in the government’s efforts to reduce the nation’s high current account deficit, according to Treasury and Finance Minister Mehmet Şimşek.
“We have made significant progress in reducing the high current account deficit, one of the major macroeconomic imbalances,” Şimşek wrote on social media platform X.
“In July, the annual trade deficit decreased by $38.7 billion compared to the same period last year,” Şimşek noted, adding that this means the annual current account deficit has likely fallen below $20 billion last month.
Excluding energy products and non-monetary gold, the foreign trade shortfall was $2.98 billion in July.
The exports-to-imports coverage ratio rose to 75.5%, a sharp improvement from 61.2% last year.
Between January and July, the trade shortfall narrowed by 32.4% year-over-year to $49.9 billion, according to the TurkStat data.
Exports grew 4.1% at an annualized pace to $148.7 billion. Imports fell 8.3% to $198.7 billion.
The main partner country for exports during July was Germany, followed by the U.K., U.S., Iraq and Italy, the data showed.
“The narrowing of the current account deficit and the reduced need for external financing are making a significant contribution to our disinflation process,” said Şimşek.
“Our main objective is to achieve price stability, which will ensure fair income distribution and sustainable prosperity.”
Annualized gap plunges
Exports are among the priority areas that the Turkish government is seeking to rely on as they rebalance the economy’s growth composition.
As part of its economic program, Türkiye introduced measures to cap strong domestic demand – one of the main reasons for higher imports – and to boost investments and exports to improve the current account balance.
Flipping the chronic current account and trade deficits into surpluses is high on the agenda since the government started reversing years of loose monetary policy after last May’s presidential and parliamentary elections.
Vice President Cevdet Yılmaz said the government’s policies are positively affecting expectations and enhancing predictability in the economic environment, leading to continued growth in exports.
The 12-month rolling exports increased to $261.5 billion as of July, a record high. This helped the annualized trade deficit to fall to $82.4 billion, Yılmaz wrote on X.
“In an environment where risks, particularly the current account deficit, are diminishing, access to foreign currency is improving and the cost of external financing is decreasing,” he noted.
“With the economic stability and confidence we have established, we are advancing steadily and decisively toward our goal of export-led sustainable growth and employment-friendly policies.”
The government, as part of its medium-term program, has set an export target of $267 billion for 2024. Shipments hit a record $256 billion in the whole of 2023.
Trade Minister Ömer Bolat echoed Yılmaz’s views, saying the latest trade data reflects the success of the government’s economic policies.
Bolat emphasized that the steps taken are demonstrating the medium-term program’s effectiveness, as official figures show that goods and services exports are rising while imports continue to decline.
“On a 12-month rolling basis, the trade deficit decreased by approximately $39 billion to $82.3 billion as of July,” Bolat wrote on X. “This indicates that our current account deficit, which stood at $57.2 billion in May 2023, has likely fallen below $20 billion over the past 14 months.”
“The balancing and improvement in foreign trade and current account will support the increase in foreign exchange reserves and strengthen stability,” said the minister.
