ECONOMY

Turkish trade deficit soars 84 pct in H1 as consumer imports surge

ANKARA (Reuters) – Turkey’s trade deficit widened further in June, sparking concerns for stability in the emerging market economy ahead of the expiry of its IMF loan accord next February. Fast industrial growth as well as robust demand for consumer products are responsible for widening trade and current account deficits, reviving memories of a 2001 financial crisis which slashed national income by almost 10 percent. Turkey’s trade deficit soared 84 percent year-on-year to $16.844 billion in the first half of 2004, the State Statistics Office said yesterday. «If the rise in the trade deficit does not slow in July, then it means we have a serious problem,» JP Morgan’s Yarkin Cebeci said. The trade deficit in June alone rose by 75.8 percent to $3.395 billion, compared with a deficit in May of $3.207 billion. The ratio of exports to imports fell to 59.8 percent in June from 66.3 percent last year. The current account deficit exceeded the government’s target for the full year in the first five months of 2004, climbing to $8.881 billion by the end of May. Although imports of consumer goods soared by 101.3 percent to $1.181 billion in June, some analysts believe its impact on the economy should not be exaggerated. «The increase in imports of consumer goods is very high, but this should not be a concern since it constitutes only 14 percent of the total,» Turkish Investment analyst Emre Tezmen said. Car imports especially are drawing attention with a 136.3 percent rise to $980.4 million in June. Exports rose 31.8 percent year-on-year to $28.589 billion in the first half of 2004, and imports swelled by 47.3 percent to $45.433 billion. The statistics office said exports rose 33 percent year-on-year in June to $5.051 billion and imports rose 47.5 percent to $8.446 billion. But lower bank lending to consumers in June and depreciation of the Turkish lira should remove some worries, said Tezmen. «Turkey has a stable government and is implementing its IMF-backed economic program successfully,» he added.