Türkiye's foreign trade deficit narrowed to a five-month low in June despite a notable fall in exports, as imports maintained a downward trend, official data showed on Wednesday.
Exports slipped by 10.6% year-over-year to $18.57 billion (TL 604.97 billion), the Trade Ministry data showed. Imports were down 4.1% to $25 billion.
The foreign trade gap rose by 21.4% compared to a year ago to $6.4 billion, the data showed.
Treasury and Finance Minister Mehmet Şimşek said the deficit rose temporarily due to calendar effects.
"We will achieve significant improvement in the external balance this year," Şimşek wrote on the social media platform X, formerly Twitter.
"To make this improvement permanent, the transformation in energy and the new industrial policy play a crucial role."
Trade Minister Ömer Bolat said the export dip in June was due to calendar effects while also noting imports maintained a downward course.
"This data clearly shows that our foreign trade policies and the measures taken are yielding positive results," Bolat wrote on X.
"We will continue our intense efforts with determination to direct our exports toward value-added and high-tech sectors, protect our domestic producers, increase our share in global markets and expand our trade volume," he explained.
From January through June, exports rose 2% to $125.45 billion, while imports declined by 8.5% to $168.7 billion.
The trade shortfall in the first half of the year fell by more than a third from a year ago to $43.2 billion, the Trade Ministry said.
The annualized exports jumped 2.5% to $257.8 billion. Imports were down 6.7% to $346.1 billion.
The trade gap over the last 12 months narrowed by $31 billion to $88.3 billion, the data showed.
Lowering current account gap
Exports are among the priority areas that the Turkish government is seeking to rely on as it rebalances the economy’s growth composition, which has, over the years, relied mainly on private consumption.
That can be challenging in a high inflationary environment, like in Türkiye, as robust domestic demand can be one of the main drivers of inflation and prove hard to curb.
Authorities have delivered aggressive monetary tightening over the past year to cool demand and rein in inflation, which eased to 71.6% in June on an annual basis, marking the first drop in eight months.
Flipping the chronic current account and trade deficits into surpluses is also high on the agenda since the government started reversing years of loose monetary policy after last May's presidential and parliamentary elections.
Şimşek said the government's goal is to permanently reduce the ratio of the current account deficit to gross domestic product (GDP) to below 2.5%.
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.
The annualized 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 shortfall 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.
Şimşek said last week the annual current account deficit is expected to have improved by some $6 billion on a 12-month basis in May, falling down to $26 billion.
The data for the May current account balance will be released on July 12.
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.