May 25, 2024

Market players had predicted a high foreign trade deficit based on the increase in import customs duties in the budget figures. In addition, the Central Bank’s signal that “domestic demand will revive in the fourth quarter” was effective in misleading market players.

Looking at the details, it is seen that the deviation in the forecasts is due to the decline in imports rather than the faster-than-normal growth in exports. In October, exports increased by 12% compared to the same month of the previous year, in line with the forecasts, while imports contracted by around 6%.
Foreign trade figures give us two main messages. In the last quarter of the year, there is no strong recovery in domestic demand as expected. The balancing between the components of growth is not with a strong increase in exports as desired, but with a modest increase in exports and rapidly shrinking imports.

Do not ask where this comment came from as exports increased by 12%. In order to interpret the foreign trade performance more accurately, it is necessary to make corrections according to the figures of precious stones and minerals.

Excluding the precious stones and metals figures, the annual growth of exports fell from 11.6% to 1.7% in October, and the annual decline of imports from 5.6% to 4.0%.
Excluding precious stones and minerals, the ratio of exports to imports declines from 71% to 64% in October, and from 67% to 60% in the first ten months of the year. Similarly, the share of the European Union in our exports increased from 40% to 45% in October, and from 38% to 43% in the first 10 months.

Do not be misunderstood, we are not saying that there would be no recovery in the current account deficit without the increase in gold exports. In the first nine months of the year, there was a very serious contraction of 21 billion dollars in our current account deficit.   The non-monetary gold trade explains only 40% of this contraction. The remaining close to 13 billion dollars shrinkage was realized thanks to the slowdown in domestic demand in parallel with the measures taken by the economy administration.

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