Turkish exports hit record $23.4B as energy weighs on trade deficit

Turkey registered the highest monthly exports ever in April, official data showed Thursday, while its trade deficit nearly doubled mainly due to soaring energy import costs

Exports surged 24.6% year-over-year last month to $23.4 billion (TL 347.86 billion), Trade Minister Mehmet Muş said. “This is the highest ever monthly export figure,” he noted.

It followed monthly records in the first three months of the year, a period marked by a widening trade deficit fueled by increasing energy costs.

Russia’s invasion of Ukraine has sent global commodity prices soaring, threatening to impact Turkey’s new economic program that aims to record a current account surplus.

Imports rose 35% on annual basis to $29.5 billion last month, with total trade volume surging over 30% to $52.8 billion, Muş told a meeting in the capital Ankara to announce the preliminary trade figures.

The trade deficit jumped 98% year-over-year in April to $6.1 billion, the data showed, for a total of $32.5 billion in the first four months of 2022.

Energy imports soared 134.1% year-over-year to $7.7 billion, slightly down from $8.4 billion in March, taking a total to $32.7 billion from January through April – equal to an annual rise of 173.1%.

“As a matter of fact, excluding energy, export-import covering ratio increased to more than 100%,” Muş said. “We see that the global increases in commodity prices, especially oil and natural gas, continue to be effective in the increasing January-April imports.”

Energy imports accounted for a $20.7 billion out of the total $33.2 billion increase in imports from January through April of 2022, Muş said.

The Russia-Ukraine conflict has lifted energy prices all over the world, a situation that Muş said has also affected Turkey and has created upward pressure on import prices.

Commodity price shock from Ukraine war

Global food and fuel price shocks linked to the war are set to last until at least the end of 2024 and raise the risk of stagflation, the World Bank said in its Commodities Market Outlook report published last week.

In its first comprehensive analysis of the war’s impact on commodity markets, the bank, which provides loans and grants to low and middle-income countries, said the world faces the biggest commodity price shock since the 1970s.

Russia is the world’s largest natural gas and fertilizer exporter, and second-largest crude oil exporter. Together with Ukraine, it accounts for nearly a third of global wheat exports, 19% of corn exports and 80% of exports of sunflower oil exports.

Production and exports of these and other commodities have been disrupted since Russia’s Feb. 24 invasion of Ukraine.

Surging oil prices hit their highest since 2008 at more than $139 a barrel in March after the war exacerbated supply concerns that were already fuelling a price rally.

As a result, the World Bank expects energy prices to rise more than 50% in 2022 before easing in 2023 and 2024, while non-energy prices, including agriculture and metals, are seen climbing by almost 20% in 2022 before moderating.

“The ongoing war, the growing tension in this context, and the Russian response to Europe’s efforts to permanently reduce its energy dependence on Russia do not reduce the persistence of high prices in energy commodities and the risk of price fluctuations off the agenda,” Muş said.

“Therefore, I would like to emphasize once again that the increase in our imports is due to the excessive increase in world energy prices,” he stressed.

“Despite all these negatives in energy prices, when we evaluate the data, we can state that our country has shown a fairly strong export performance compared to the same period last year.”

January-April exports jumped 21.4% year-over-year to around $83.6 billion, the data showed, while imports climbed 40.1% to nearly $116.1 billion.

Turkey’s exports totaled a record $225.4 billion in 2021 and the government and economists expect they will reach $250 billion this year. The 12-month rolling export figure reached $240 billion as of April, Muş said.

Muş recalled that the World Trade Organization (WTO) last month revised its forecast for global trade growth this year to 3%, down from 4.7%.

It attributed it to the impact of the Russia-Ukraine war and warned of a potential food crisis caused by surging prices.

The global trade watchdog also lowered its import growth forecast for the European Union, Turkey’s biggest trade partner, to 3.7%, down from 6.8%.

Germany top market

Turkish Exporters’ Assembly (TIM) head Ismail Gülle said records were broken in 18 out of the last 20 months, expressing expectations that the country could reach the $250 billion target before year-end.

“Based on the figures, excluding energy, we managed to register a foreign trade surplus this month,” Gülle said.

“Now we can clearly see that Turkey has begun to reap the fruits of its breakthrough in exports.”

Germany remained the biggest export market in April as it purchased $2 billion worth of Turkish goods, the data showed. It was followed by the U.S. with $1.8 billion and the U.K. with $1.2 billion.

Sales to 27 countries, including Germany, the U.S., Israel and Spain, saw their highest levels ever, Gülle said.

Exports to the European Union jumped 29% year-over-year to reach $10 billion. The bloc accounted for 42% of Turkey’s overall sales last month.

Among others, exports to sub-Saharan Africa topped $1 billion on monthly basis for the first time, a 68% year-over-year increase, Gülle said.

The chemical industry outpaced the automotive sector as it hit an all-time high of $3.3 billion in exports to rank first in April. The automotive industry followed with $2.7 billion and ready-to-wear with $2 billion, the data showed.

Exports made with Turkish lira surged 55% year-over-year to TL 8.7 billion, said Gülle.

He also informed that some 2,080 new firms joined the export family in April, achieving $123.4 million worth of sales. The number of firms making exports has thus reached 48,938, Gülle added.

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