Cover Chart: Turkish exports in red, Imports Blue, by Yatirim Finansman
Turkey’s tourism revenue hit a record $46.3 billion in 2022 even as its trade deficit swelled to more than $109 billion, as a fallout from war in nearby Ukraine brought a surge of Russian arrivals but also drove up energy-import costs, wrote Duvar English.
The two milestones for the big emerging market economy came as President Recep Tayyip Erdoğan faces a tight election in May, and as he forges on with an unorthodox policy of slashing interest rates to eventually achieve a current account surplus.
That goal was complicated by a surge in oil and gas prices in the first half of last year and by the lira currency’s slide due to the policy itself, analysts said.
Revenue from tourists jumped 53% from the previous year, and blew past the previous high of $34.5 billion in 2019 before the COVID-19 pandemic hit, data from the Turkish Statistical Institute showed on Jan. 31.
Foreign arrivals totalled 44.6 million last year, just shy of the 2019 peak of 45.1 million, tourism ministry data showed.
COVID-19 restrictions all but dissipated in 2022 and Russians, which were second only to Germans in foreign arrivals, came in droves partly due to flight restrictions imposed by Western nations over Moscow’s invasion of Ukraine.
Hundreds of thousands of Russians are also estimated to have moved last year to Turkey, seen as a safe haven for investment in homes and other assets.
Tourism Minister Mehmet Ersoy on Jan. 31 predicted that 2023 would see $56 billion in tourism revenue.
But even as arrivals at Turkey’s Mediterranean beaches and historical sites brought in forex, energy imports shot up by more than 90% to $96.55 billion in 2022, the official data showed.
Energy imports were up 14% in December.
Russia’s invasion last year initially sent oil and gas prices surging, straining Turkey, which imports virtually all its energy needs.
The overall foreign trade deficit surged 137% year-on-year to $109.54 billion in 2022, according to the general trade system, the data showed, while the December deficit increased 42% from a year earlier.
In 2022, exports rose 12.9% to $254.1 billion and imports jumped 34% to $363.7 billion. In December, the deficit amounted to $9.7 billion.
Under Erdoğan’s economic programme unveiled in 2021, Turkey aims to shift from chronic deficits to a current account surplus through stronger exports and low rates.
But the rate cuts sparked a currency crash in late 2021 that sliced 44% from the lira’s value that year, sending inflation roaring above 85% in 2022.
The currency weakness, including another 29% depreciation in 2022, attracted European and Arab tourists last year, sector officials said.
In the fourth quarter, tourism revenue climbed 22.2% to $11.37 billion, the data showed.
Yatirim Finansman analysis of trade deficit
Total exports increased by 3.0% compared to the same month of the previous year and reached 22.9 billion dollars; In 2022, it rose 12.9% year-on-year to $254.2 billion (2021: $225.2 billion).
Exports of capital and consumer goods increased by 16.5% and 3.3%, respectively, on an annual basis, while exports of intermediate goods decreased by 1.0% on an annual basis.
The share of European countries in Turkey’s total exports was 55.0% in 2022 (2013-2021 Average: 54.8%).
Total imports increased by 12.2% compared to the same month of the previous year and reached 32.6 billion dollars; In 2022, it rose 34.0% year-on-year to $363.7 billion (2021: $271.4 billion)
Imports of capital goods, intermediate goods and consumer goods increased by 17.9%, 7.3% and 56.4% yoy, respectively.
12-month energy imports increased by 1.1% month-on-month to 96.5 billion dollars (2021: 50.7 billion dollars); gold imports rose 13.5% month-on-month to $20.4 billion (2021: $5.5 billion). Total imports excluding energy and gold remained flat at $246.7 billion (2021: $215.2 billion).
Turkey’s exports to Germany (which has the highest share among exporting countries with 8.3%) increased by 9.5% on an annual basis in 2022.
The ratio of exports to imports was 69.9% in 2022 (2021: 83.0%, 2013-2021 average 73.9%).
According to the first calculation we made in the light of foreign trade figures, a current account deficit of around 5.4 billion dollars could be given in December; We estimate that this figure may reduce the 12-month current account deficit, which was $45.0 billion in November, to $47.2 billion in December.
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