Türkiye’s trade deficit narrows by 41.8% in July

In a robust show of economic resilience, Türkiye’s trade deficit saw a substantial reduction of 41.8% in July, with exports climbing and imports on a decline, signaling a strengthening trade balance.

What are economic indicators of trade deficit?

• July 2024: Türkiye’s trade deficit reduced significantly to $7.3 billion from $12.5 billion in July 2023. Exports increased by 13.8% year-over-year to $22.5 billion, while imports decreased by 7.8% to $29.8 billion.
• Year-to-date analysis: From January to July 2024, exports grew by 4.1% to $148.7 billion, and imports reduced by 8.3% to $198.7 billion compared to the same period last year.
• Deficit reduction: Over the January to July period, the trade deficit decreased by 32.4% to $49.9 billion from the previous year’s $73.9 billion.

Here is breakdown of Türkiye’s exports

• Manufacturing dominance: The manufacturing sector, contributing an overwhelming 94.5% to the total exports in July, shows the country’s robust industrial capabilities.
• Diversified economy: Other sectors like agriculture, forestry, and fishing accounted for 2.8%, and mining and quarrying at 2.1%, highlighting a diversified economic base.
• Import composition: The import composition included intermediate goods at 68.6%, capital goods at 15.9%, and consumer goods at 15.3%.
• Excluding energy and gold: When excluding energy products and non-monetary gold, exports rose 13% to $20.5 billion, while imports fell 4.2% to $23.5 billion.
• Coverage ratios: The export coverage ratio improved from 61.2% in July 2023 to 75.5% in July 2024.
• High-tech exports: High-technology products constituted 2.8% of the manufacturing exports in July 2024.
• Seasonal adjustments: Seasonally adjusted, exports increased by 3% in July from the previous month, while imports decreased by 3.9%.

Who are top trading partners of Türkiye?

• Exports: Germany was the top export destination in July 2024, with exports totaling $1.75 billion. This was followed by the U.K. ($1.6 billion), the U.S. ($1.44 billion), Iraq ($1.06 billion) and Italy ($1.03 billion).
• Imports: China topped the import list with $4.15 billion, followed by Russia ($3.77 billion), Germany ($2.54 billion), Italy ($1.41 billion), and the U.S. ($1.40 billion).

What are trade systems?

• General trade system: Under this system, exports for July 2024 were recorded at $20.4 billion, up 14% from the previous year, while imports declined by 8.6% to $27.1 billion.
• Special trade system: Using this system, the trade deficit for July 2024 decreased by 42.9% to $6.7 billion, with an export-to-import coverage ratio of 75.2%.

How Turkish government officials comments on figures?

• Mehmet Simsek, Minister of Treasury and Finance provided a detailed analysis of the latest trade figures, emphasizing the substantial progress made in addressing one of Türkiye’s macroeconomic challenges—the high current account deficit.

Simsek noted that in July, the annual trade deficit decreased by $38.7 billion compared to the previous year. He pointed out that this improvement suggests the annual current account deficit could drop below $20 billion, a significant milestone.

The reduction in the current account deficit and external financing needs is making a crucial contribution to the disinflation process. By achieving our primary goal of price stability, we aim to ensure fair income distribution and sustainable prosperity

Mehmet Simsek

• Cevdet Yilmaz, Vice President highlightes the positive outcomes of the government’s economic policies. Yilmaz pointed out that the increased predictability and positive expectations in the economic environment have fostered continued export growth.

In an environment where risks, particularly the current account deficit, are diminishing, access to foreign exchange is improving, and the cost of external financing is decreasing. With the economic stability and confidence we have established, we are determinedly moving forward with our goal of export-focused, sustainable growth and employment-friendly policies

Cevdet Yilmaz

• Omer Bolat, Minister of Trade, remarked that the positive trade figures for July reflect the successful outcomes of the government’s economic policies. He stated that the policies have led to both an increase in exports and a positive contribution to growth targets.

He praised the efforts of Turkish exporters, noting that the export-to-import coverage ratio improved significantly from 61.2% in July 2023 to 75.5% in July 2024, and from 65.9% to 74.9% in the January-July period.

As of July, the annualized trade deficit has decreased by approximately $39 billion, bringing it down to $82.3 billion. Consequently, our current account deficit, which was $57.2 billion in May 2023, is now projected to fall below $20 billion over the past 14 months. The balancing and improvement observed in foreign trade and current account balances will enhance our foreign exchange reserves and strengthen economic stability. I extend my heartfelt thanks to all our exporters and producers

Omer Bolat