Turkish trade gap narrows in reprieve for thin currency reserves

Turkey’s trade deficit improved last month on a drop in energy imports, bringing some relief to foreign-currency demand that’s weighed on the lira and drained reserves.

Imports in June fell around 17% year-on-year to $26.3 billion, the lowest level in nearly two years, preliminary data from the Ministry of Trade showed on Monday. 

Exports also fell but by less, dropping 11% to $20.9 billion. The ministry attributed the fall to the nine-day religious Eid holiday during which deliveries stopped.

The flows narrowed Turkey’s overall trade gap by an annual 35% to $5.4 billion, a relative reprieve after persistently high energy costs and local demand for foreign goods sapped the state’s foreign-exchange reserves as the local currency weakened. 

The ministry said it expected the balance to improve in the coming months, promising unspecified additional steps to slow imports and boost exports even amid “stagnation in the global economy.”

A 23% decline in the lira against the dollar since May’s elections should support exporters, who have repeatedly called for a weaker currency to make their products more competitive abroad.

Though low summer gas demand bodes well for the energy bill, gold presents an increasing threat. Imports of the precious metal — a popular inflation hedge among citizens — remained strong in June, surging almost 63% year on year.