Trade Minister Ömer Bolat on Friday expressed optimism about the trajectory of Turkish exports, foreseeing a rebound and a potential 10% increase in outbound shipments, and a similar decline in imports.
“July is going on well; there could be an export increase of around 10% and about 10% decline in imports,” Bolat told a joint interview with private broadcaster Habertürk and Bloomberg HT.
The minister also dismissed the idea of continuous currency devaluation, stressing that it’s not feasible to achieve competitiveness by constantly devaluing the Turkish lira. He recalled the government does not have an exchange rate target.
Exports are among the priority areas that the Turkish government is seeking to rely on as it rebalances the economy’s growth composition.
As part of its economic program, Türkiye introduced measures to cap strong domestic demand – one of the main reasons for higher imports – and to boost investments and exports to improve the current account balance.
Flipping the chronic current account and trade deficits into surpluses is high on the agenda since the government started reversing years of loose monetary policy after last May’s presidential and parliamentary elections.
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.
Official data showed Türkiye’s exports rose 2% year-over-year to $125.45 billion from January through June, exports, while imports declined by 8.5% to $168.7 billion.
The trade deficit in the first half fell by more than a third from a year ago to $43.2 billion. The gap over the last 12 months narrowed by $31 billion to $88.3 billion.
The annualized exports jumped 2.5% to $257.8 billion. Imports were down 6.7% to $346.1 billion.
The government, as part of its medium-term program, had set an exports target of $267 billion for 2024.
“Exports increased by $2.4 billion in the first six months, and in May alone, the foreign trade deficit decreased by $35 billion,” said Bolat.
Despite a dip in June, the minister assured that efforts to meet the annual export target are intensifying.
“By September and October, we expect the current account deficit to fall below $20 billion. We are striving to keep the foreign trade deficit at $80 billion, which is significantly below the medium-term program (OVP) forecast,” said Bolat.
“Our year-end target is to keep the current account deficit between $20 billion-$25 billion.”
The minister also appeared to address exporters’ complaints suggesting that the Turkish lira is overvalued.
Bolat echoed Treasury and Finance Minister Mehmet Şimşek’s view that authorities do not have an exchange rate target despite the lira’s relative stability over the last several months.
“We cannot achieve competitiveness by continuously devaluing the Turkish lira. The economy is a complex system of balances, and we must cater to the demands of all sectors,” said Bolat.
“A healthy growth and foreign trade process involves stable prices and exchange rates. We do not have a fixed exchange rate regime or target.”
Among others, Bolat also discussed trade relations with key partners, highlighting a significant imbalance with China.
“We have $3 billion in exports to China and $46 billion in imports. Currently, Türkiye has over 50 anti-dumping measures in place,” he said.
“The global issues of excessive demand, insufficient supply, and disrupted supply chains have led to severe inflation.”
In contrast, trade with the European Union remains robust.
“Our trade volume with the EU is $211 billion, with $105 billion in exports from Türkiye to the EU. While markets in the EU and the U.S. are sluggish, we are making strides in developing trade with Islamic countries,” Bolat stated.
He also mentioned plans to provide $50 billion in Türk Eximbank loans this year and preparations for green deal compliance with the EU.
