NEWS ECONOMY NEWS        02/07/2020

Turkey’s foreign trade activity recovers in June 2020 per preliminary calculations

According to preliminary figures provided by the Trade Ministry based on the General Trade System (GTS), Turkey’s foreign trade deficit for June 2020 was USD 2,836 million, 17.3% lower than the figure for the same month of the previous year, and 17.1% lower than the USD 3,420 million deficit figure for the previous month of May 2020.


Exports were USD 13,469 million in June 2020, 15.8% higher than the figure for the same month of the previous year, and 35.1% higher than the figure for the previous month of May 2020. Imports were USD 16,305 million in June 2020, 8.2% higher than the figure for the same month of the previous year, and 21.3% higher than the figure for the previous month of May 2020. The collapse of export and import figures in April and May was due to the coronavirus pandemic which forced most countries to introduce strict isolation procedures for their populations. Businesses throughout the world were forced to close down as demand for their goods or services evaporated. However, as the lockdown was gradually relaxed in June, so Turkey’s foreign trade activity returned to pre-pandemic levels. Foreign trade activity was 11.5% higher in June compared to the same month of the previous year, and was 27.5% higher than the figure for the previous month of May.


The June 2020 foreign trade results show a significant recovery on the previous two months. However, there are claims that the June 2020 results only show a temporary recovery on paper. Firstly, there is the calendar effect. The Ramadan holiday came in June last year and an extension to 9 days was provided by the government. If you discard weekends, there were only 15 working days in June 2019. This year the Ramadan holiday was in May and there were 22 working days in June. Therefore there were 7 more working days in June 2020. Secondly, following the lockdown in April and May, there will have been a gradual recovery in global trade which would have benefited Turkey’s foreign trade activity. Thirdly, there will have been a backlog of orders from April and May which would have been met in June. Imports in June were expected to decrease because of the large increases in import custom duties. This was indeed the case but did not show a comparative fall because of the extra 7 working days in June 2020.


The percentage of imports met by exports was 82.6% in June 2020 compared with 77.2% in the same month of the previous year.


With regards the first half of 2020, Turkey’s foreign trade deficit was USD 23,842 million, 72.9% higher than the figure for the same period of the previous year. Exports were USD 75,055 million, 15.1% lower, and imports were USD 98,896 million, 3.2% lower than the figures for the same period of the previous year.


The automotive sector was again the leader in the export table in June 2020. Due to the coronavirus pandemic, automotive manufacturing plants had mostly been closed in the month of April, had reopened as from mid-May, and were again fully operational in June 2020. Automotive exports in June 2020, were USD 1,719 million, 12.8% of total exports, followed by machinery and equipment exports with USD 1,293 million (9.6% of total exports). Normal monthly automotive exports are over USD 2 billion and around 14-15% of total exports, and it is expected that automotive exports will return to their pre-pandemic level in coming months assuming that there will not be a second surge in the pandemic.


The energy sector has again lost its first place again in the imports table in June 2020, as in April and May 2020. Due to the coronavirus pandemic, production in Turkey’s industry had largely scaled down, roads were emptied of traffic, and the population had economised on use of home-use electricity and natural gas. The global energy markets had also seen upheaval and energy prices plummeted. The energy import figure consequently fell to USD 1,055 million in April 2020 and USD 1,293 million in May 2020, with a recovery in June 2020 with USD 1,574 million. The June 2020 figure was 9.6% of total imports, compared with 19% in the same month of the previous year. In June 2020, energy imports came in third behind precious metals (USD 2,395 million) and machinery and mechanical equipment (USD 1,918 million). Global petrol prices are still depressed and it is expected that energy imports will only regain their previous position as the global economy gradually recovers pushing energy demand up, and as production levels in Turkey return to normal. 


The top five countries to which Turkey exported in June 2020 are Germany (USD 1,293 million), UK (USD 1,013 million), USA (USD 792 million), Iraq (USD 701 million), and Italy (USD 616 million).


The top five countries from which Turkey imported in June 2020 are China (USD 1,935 million), Germany (USD 1,526 million), Russia (USD 1,185 million), Iraq (USD 1,105 million), and USA (USD 785 million).


For the year 2019, the trade deficit was USD 29,511 million, a 45.3% decrease on the previous year. Exports in the year 2019 were USD 180,834 million (a 2.1% increase) and imports were USD 210,345 million (a 9% decrease).


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