May trade deficit up a staggering 20 percent and…

May trade deficit up a staggering 20 percent

Turkey’s foreign trade deficit widened by an annual 20.2% in May and increased to $4.13 billion following declines posted in March and April.

Exports rose by an annual 65.7% to $16.5 billion while imports expanded by 54% to $20.6 billion.  The strong growth performance stems from the base year effect.  Hence for the January-May 2021 period, exports at $85.2 were up 38.3% increase and imports at $103.5 billion recorded 25.2% increase compared with January-May 2020. In January-May 2021 period, foreign trade deficit was $18.3 billion with a 13.1% decrease compared to the same period last year.

To eliminate the base effect, comparison with 2019 May foreign trade figures show that export of May 2021 is 2.1% below the level of May 2019 exports ($16.85bn) while May 2021 imports are 11.2% above the May 2019 imports ($18.5bn). For the five month comparison between 2019 and 2021; imports with 18.8% surge beat the 11.1% increase in exports.

The boost in Turkey’s exports is good news yet partly misleading.  As of May there is as obvious slowdown in export performance compared to the pre-pandemic terms.  In contrast, the rise in the price of oil keeps adding to the import bill dominating the weak signs of slowing domestic demand.  Hence the January-May 2021 trade deficit is significantly wider compared to 2019 same period, up by 74%. The figure of course stands out especially when the tourism sector is still suffering from the COVID-19 meltdown.