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Turkey´s foreign trade deficit dropped by more than one-fifth year-on-year in February, the official statistics bureau has said. According to Turkish Statistics Institute (TurkStat) figures, the gap declined by 20.4 percent from $7.46 billion in February 2011 to $5.93 billion the second month of this year.
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Exports grew by 17.1 percent to $11.77 billion, whereas imports saw a slight increase of 1.1 percent to $17.52 billion, official data show.
The reduction came as a result of a much weaker lira against major currencies the euro and dollar – which gave Turkish goods a price advantage in international markets, while making foreign goods more expensive domestically -- as well as the government's efforts to diversify export markets in line with its centennial goal of having $500 billion in revenue from sales overseas by 2023. A dollar was worth TL 1.59 on average in February of last year as compared to TL 1.74 this February. The euro, likewise, was also much stronger compared to the national currency, jumping from TL 2.18 in February 2011 to TL 2.33 three months ago.
The foreign trade deficit is a highly problematic issue for a country that relies on foreign supplies for nearly all of its energy needs and whose industries are also heavily dependent on foreign intermediate goods to keep their wheels turning. This gap has grown to a barely sustainable level for the country as it has outpaced almost all world nations in economic growth in the past two years.
The foreign trade deficit spiked from $39 billion in 2009 -- when the Turkish economy contracted by nearly 5 percent -- to $72 billion in 2010, when the economic growth rate was at 8.9 percent. It soared to $105 billion, or some 13 percent of Turkey’s gross domestic product (GDP) last year, when the national economy grew by around 8 percent again. The foreign trade deficit is problematic because it causes the country’s foreign reserves to constantly bleed out and could eventually disrupt Turkey’s balance of payments as it also leads to a high current account deficit (CAD).
To address this issue, the Central Bank of Turkey teamed up with government to add monetary measures on top of the administration’s fiscal measures last year. Whereas the bank aimed to slow down credit expansion and the weakening of the lira against the euro and dollar, the government imposed higher taxes -- in the form of what is called the private consumption tax (ÖTV) in Turkey -- on certain goods such as cars and mobile phones, as well as tobacco and alcoholic beverage, to cut imports.
The news lifted the spirits in the market, strengthening hopes that Turkey can indeed overcome the dilemma of suffering from high foreign trade and current account deficits in times of speedy economic growth. The benchmark ÝMKB-100 index of the Ýstanbul Stock Exchange (ÝMKB) gained more than 1 percent in early trading.
Net public debt pile melts
Another piece of news that added to the enthusiasm in the markets before the weekend recess was related to the reduction of the country’s net public debt, from TL 317.6 billion in 2010 to TL 290.5 billion last year, marking an 8.6 percent drop. According to Treasury figures also released on Friday, Turkey’s gross public debt pile increased by 9.9 percent to TL 546 billion ($305 billion), or some 40 percent of its GDP, at the end of the year.
But the increase in the central bank’s net assets, public assets and unemployment insurance fund assets combined was larger, explaining the reduction in the net public debt in a liabilities minus assets formula.
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Source : todayszaman.com
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