ISTANBUL: Turkish exports in 2015 may be below 2014 levels in dollar terms even if the overall volume is larger, Economy Minister Nihat Zeybekci said.
“There is a risk that 2015 Turkish exports will be lower than 2014 levels in dollar terms, even though in quantity terms we could export more than last year,” Zeybekci said in a statement.
Meanwhile, Turkey’s current account deficit narrowed less than expected in April, according to data released on Thursday, underscoring its vulnerability to a US rate increase and providing another concern for investors already worried by political uncertainty.
Investor sentiment toward Turkey — already soured by stalling growth and rising debt — was battered by Sunday’s parliamentary election. The ruling AK Party’s failure to win a majority raised the prospect of fractious coalition government.
Striking a conciliatory note, Turkish President Tayyip Erdogan said on Thursday political parties should move quickly to form a new government, giving the beleagured lira some help.
But the overall picture for the economy, and the lira, remains grim, especially once the US Federal Reserve embarks on a tightening cycle. That is likely to prompt investors to divert more money from Turkey and other fragile emerging markets into the United States.
“The current account deficit remains the key weakness in the economy, making it particularly vulnerable amid the current political uncertainty and in the run-up to Fed tightening,” William Jackson of Capital Economics said in a note to clients.
“The deficit continues to be funded by portfolio inflows into the equity and bond markets, as well as borrowing from foreign banks. These tend to be relatively volatile.”
The current account deficit narrowed to $3.41 billion in April, the central bank said, from $4.9 billion a year earlier. But that was above the $3 billion deficit forecast in a Reuters poll.
The decline in the deficit was driven in part by a rise of gold exports, Jackson said, adding the trend was unlikely to be sustained.
