ISTANBUL: Turkey’s trade deficit fell 30 percent in August on the back of strong gold sales to Iran, bolstering efforts to improve its current account and giving more room to cut interest rates.
The trade deficit fell to $5.86bn, the Turkish Statistics Institute said, compared with a forecast for $8.10bn in a Reuters poll and a $7.89bn deficit in July.
“This data is a result of soaring gold exports, which broke a record with $2.3bn in August,” Oyak Securities economist Mehmet Besimoglu said. “Gold exports were to Iran, made via the United Arab Emirates.”
Turkish gold sales to Iran have soared as Iranians turn to the precious metal to protect savings and, potentially, to trade as Western sanctions aimed at forcing the Islamic republic to curb its nuclear programme tighten. Turkey’s gold exports, as a whole, jumped more than four-fold to $11.2bn in the first eight months of 2012.
Exports rose 14.5 percent to $12.87bn, as growing trade with markets in Africa and the Middle East eclipsed a slowdown in demand from Europe. Imports fell 4.8 percent to $18.74bn.
Overall exports to the United Arab Emirates jumped eight-fold to $2.23bn, making the UAE Turkey’s biggest export destination in August. “The improvement in the foreign trade deficit accelerated sharply in August. It is good news for the current account deficit, but bad news for growth,” BGC Partners economist Ozgur Altug said.
Central bank Governor Erdem Basci said last Friday while the bank expected economic growth to pick up next year and inflation to fall, the extent to which this would allow it to cut rates would depend on how quickly exports grow.
The trade deficit in the first eight months of the year narrowed 21 percent to $56.6bn. Exports to Africa and the Middle East rose 43 percent and 63 percent respectively, while exports to Europe, Turkey’s main trading partner, fell 9 percent.
Reuters
