Turkey’s trade deficit narrowed for a seventh month in May as exports jumped and Iran bought more Turkish gold.
The gap declined to $8.6 billion from $10.2 billion a year earlier, the statistics office in Ankara said on its website today. The median estimate of six economists surveyed by Bloomberg was $8 billion versus a shortfall of $6.6 billion in April.
Exports jumped 21 percent to $13.2 billion in May while imports rose 3 percent to $21.8 billion. The European Union, Turkey’s largest trading partner, bought 36 percent of Turkey’s exports, down from 47 percent in the same month last year, the data show.
“The slowdown in domestic demand and fall in global energy prices will restrain the import bill in the coming months,” Basak Karaaslan, an economist at Finansbank AS in Istanbul, said in an e-mailed report. The deficit will “continue contracting in a gradual manner” in line with central bank guidance, so “we do not expect it to have any impact on monetary policy,” she said.
Rising gold sales to Iran boosted exports for a third month. Sales climbed to $1.4 billion, 11 percent of total Turkish exports of all goods and up from $1.2 billion in April and $480 million in March.
Gold to Iran
Gold exports to Iran increased after the Society for Worldwide Interbank Financial Telecommunication, known as Swift, expelled Turkey’s eastern neighbor in March, making it almost impossible for Iran to complete large international fund transfers.
Turkish Central Bank Governor Erdem Basci has tightened monetary policy since introducing an interest-rate corridor in October that allows him to adjust borrowing costs daily depending on whether he thinks developments in the currency and in inflation demand a tighter or looser policy. The weighted average rate at which the central bank lends to banks has been 9.17 percent this month, up from 8.71 percent in January.
The tightening has slowed domestic demand that surged last year after Basci lowered the benchmark rate to 5.75 percent in August last year, prolonging a borrowing spree with loan growth hovering around a 40 percent annual pace until the final quarter of the year. The loan boom also led to a surge in imports, sending the current account deficit to $77.2 billion, or about 10 percent of gross domestic product, by year-end.
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