The gold factor and foreign trade
In June, both exports and imports remained below last year and the decline in imports was higher than the decline in exports. Moreover, it’s an uncommon outcome for both exports and imports to decline in the same month.
Compared to last year, exports and imports fell by 1.3 percent and 3.8 percent, respectively. Exports seem to have made almost no headway. The reason for the decline in imports, on the other hand, is obvious.
Turkey’s gold imports in the
January-May period this year never got close to falling below one billion dollars on a monthly basis, averaging $1.6 billion per month, except in June when they plummeted to $583 million, a $1.4 billion decline from $1.99 billion last year. Imports excluding gold remained relatively steady - $17.2 billion last year compared to $17.9 billion this year.
Therefore, although it may appear as if total imports have fallen
compared to the previous year, it is clear that this is primarily due to the decline in gold imports. Excluding gold there is no decrease in imports; there is a slight increase.
As I said, the rate of decrease in exports was 1.3 percent compared to last year. Can we ignore this considering that the fall in exports is only $171 million? Not really! It would be an incomplete assessment to only look at the small drop in exports without determining its context.
First of all, the euro/dollar parity, which was 1.12 in June last year, has decreased to 1.17 this year. This is a change that should support exports.
Secondly, the dollar rate, which was 3.52 in last year’s June average, increased by 32 percent to 4.63 this year. Similarly, the euro, which was 3.95 in June last year, reached 5.41 this year, a 37 percent increase.
These developments – a weak lira and limited support from euro/ dollar parity – would under normal circumstances support exports. That was not the case. A reduction of $171 million is not important in itself, but the circumstances suggest that this reduction should not have happened.
There is a similar situation in gold exports which should not be overlooked. Gold exports, which were $647 million in June last year were only $71 million this year. Therefore, aside from all other factors, there would not have been a decline in June exports if we were able to export as much gold as last year.