Türkiye's foreign trade deficit narrowed by almost 50% in May, official data showed on Friday, as exports remained robust while imports maintained a downward trend.

The Turkish Statistical Institute (TurkStat) said the trade gap fell by 48% last month to $6.5 billion, a decline that is expected to have fueled a major improvement in Türkiye's current account deficit.

Export surged 11.3% annually to $24.1 billion in May, while imports plunged 10.4% to $30.6 billion, the data showed.

Shortly after the data release, Treasury and Finance Minister Mehmet Şimşek said the annualized trade gap improved by $35 billion, narrowing to $87 billion.

Şimşek cited annual exports reaching a record $260 billion in May and imports falling $29 billion over the last year.

From January through May, the trade deficit dropped 34.3% to $36.8 billion, down from $56.3 billion, the TurkStat said.

Outbound shipments increased 4.5% year-over-year to $106.9 billion. Imports dropped 9.2% to $143.7 billion.

Excluding energy products and non-monetary gold, Türkiye saw a $2 billion trade deficit in May, the data showed. The exports-to-imports coverage ratio rose 78.7%, compared to 63.4% in the same month last year.

Türkiye's shipments to its main trading partner, Germany, amounted to $1.9 billion in May, followed by the U.K. with $1.52 billion, the U.S. with $1.48 billion, Iraq with $1.15 billion, and Italy with $1.12 billion.

China was the top source of Türkiye's imports in May, with $3.86 billion, followed by Russia with $3.78 billion, Germany with $2.28 billion, Italy with $1.88 billion, and the U.S. with $1.46 billion.

Current account gap

Şimşek said the annual current account deficit is now expected to have improved by some $6 billion on a 12-month basis in May, falling down to $26 billion.

"We anticipate that the current account deficit will be significantly below 2.5% of national income by the second quarter," the minister wrote on social media platform X.

The data for the May current account balance will be released on July 12.

The annualized current account gap rose to $31.5 billion in April, driven by the increase in foreign trade deficit due to the Ramadan Bayram, also known as Eid al-Fitr.

The deficit widened from $7.2 billion in 2021 to $48.8 billion in 2022, largely driven by high gold imports and elevated energy prices following Russia's invasion of Ukraine. It narrowed to $45.2 billion last year, above the government forecast of $42.5 billion.

The current account is the most complete measure of trade because it includes investment flows and trade in merchandise and services. A deficit means Türkiye is consuming more from overseas than it is selling abroad.

Şimşek on Friday noted that the reduction in the deficit would decrease the need for external financing, ensure permanent reserve accumulation, strengthen financial stability and pave the way for further credit rating upgrades.

Economists expect the current account deficit to improve as monetary and fiscal policies remain tight this year.

In September, the government forecasted a deficit of $34.7 billion in 2024, but Şimşek recently said the shortfall could be between $24 billion-$27 billion for the rest of the year.