Jump in Turkey’s trade deficit leaves analysts unconcerned
ANKARA – High oil prices, a strong lira and buoyant demand for consumer and industrial imports helped push Turkey’s trade deficit up 68 percent year-on-year in March, but analysts said they were not overly worried. They said the data suggested a further deterioration in Turkey’s large current account deficit when the March numbers are released later this month, while import growth is likely to ease back by mid-year. Figures yesterday from the State Statistics Institute showed the trade gap jumped 68.3 percent year-on-year to $3.108 billion in March – slightly higher than markets expected – resulting in a first-quarter deficit of $7.209 billion. Exports in March climbed 27.9 percent to $4.999 billion but the rise was outstripped by imports, which jumped 40.9 percent to $8.107 billion. «Imports have been driven higher by strong domestic demand, high oil prices… and the strength of the lira to the end of March,» Tim Ash of Bear Stearns said in a research note. «We expect import growth to begin to ease back to the middle of the year, as the impact of the 20 percent lira sell-off over the past month gradually feeds through.» The Turkish currency has slid sharply since the beginning of April from about 1.32 million to 1.55 million to the dollar as domestic worries – including concern over the swelling current account gap – combined with a wider emerging market pullout. An unexpectedly sharp rise in the current account deficit for February, which came in at just over $2 billion, raised fears Turkey might miss targets agreed to with the International Monetary Fund under the country’s $19 billion loan deal. But the IMF has played down such fears, and most analysts say seasonal tourism receipts over the coming summer should help rein in the deficit to manageable levels of around 3 to 4 percent of gross domestic product. There was little market reaction to yesterday’s trade data. Yields on the busiest October 5, 2005 bonds were at 28.80 percent, down from 29.07 percent the previous day. ‘Healthy sign’ Haluk Burumcekci from Disbank said the trade deficit was not alarming, despite a steep rise in consumer imports, because the increase was confined mainly to the automotive sector, where imports skyrocketed 249 percent year on year. «The strong rise in imports of intermediate goods (for industry) is even a healthy sign for the Turkish economy,» he said. Analysts said continued export growth in March, despite the lira’s strength was encouraging, with productivity gains helping to sustain foreign sales. A Reuters poll earlier this month forecast March imports at $7.91 billion and exports at $5.0 billion, raising the monthly trade deficit to $2.9 billion. In February, imports were $5.91 billion and exports $3.55 billion, producing a deficit of $2.36 billion. Turkey aims to boost its exports to $51.53 billion and keep imports at $75 billion this year.
