Richard Melson

December 2005

Turkey Economy

www.ykb.com

DECEMBER 1, 2005

OCTOBER FOREIGN TRADE FIGURES

In October, exports rose by 9% with respect to the same month of the previous year and amounted to USD 6.4 billion. Imports exhibited a more rapid increase of 22.3% and reached USD 9.9 billion. Thus, the trade deficit amounted to USD 3.5 billion, exhibiting a 57.4% rise with respect to the same month of the previous year. The exports/imports ratio, on the other hand, declined to 64.6% from 72.5% in October 2004.

In October, the foreign trade figures are similar to those in September. After relatively high monthly trade deficits in May-August period with an average slightly above USD 4 billion, the monthly trade deficit figures returned back to around USD 3.5 billion level in September and October. The exports/imports ratio also exhibited an improvement in this period and rose to 65% level in the last two months, from less than 60% on average in May-August period. The growth rate of exports in October may seem relatively slow at the first glance, however it should be kept in mind that the October 2004 exports figure was the second highest monthly level of exports in 2004, pointing out to the impact of the strong base effect.

When October exports figures are examined in detail, it is observed that the most striking rises in exports with respect to selected chapters were observed in ships-boats, mineral fuels-oils, vehicles and boilers-machinery categories. The exports of the clothing sector, which is among the most important exporting sectors in Turkey, have been stagnating in the recent period due especially to the Chinese competition and this picture continued in October as well. The sharp decline in the exports of iron and steel sector, on the other hand, continued also in October. There was a strong demand coming from China in 2004 to the products of this sector, and with the fading out of that demand in 2005, this sector has been exhibiting a poor exports performance in the recent months.

When October imports figures are examined in detail, it is observed that imports of intermediate goods rose by 21%, imports of capital goods rose by 25% and imports of consumption goods increased by 35%. Thus, the increase in imports seems not to stem from a few specific sectors. In this context, the increase in the imports of intermediate goods is stimulated especially by the rise in the industrial production, which exhibits a strong performance to meet both the domestic and foreign demand. In addition, the high level of oil prices is also another factor contributing to the rise in the intermediate goods imports bill. As for the increase in the imports of capital and consumption goods, on the other hand, the vivid domestic demand for both investment and consumption is playing a critical role. Moreover, due to the real appreciation of the YTL, a shift from domestic consumption goods to imported equivalents is probably taking place. Examined with respect to selected chapters, it is observed that of the 22.3% rise in total imports in October, 9.4 percentage points stemmed from the rise in imports of mineral fuels-oils, 3.1 percentage points from the rise in imports of boilers-machinery and 3 percentage points from the rise in the imports of vehicles.

FOREIGN TRADE FIGURES

(USD Million)

October

2004

(I)

October

2005

(II)

% change

(II)/(I)

Jan.-Oct.

2004

(III)

Jan.-Oct.

2005

(IV)

%

change

(IV)/(III)

Exports

5,863

6,392

9.0

50,851

59,438

16.9

Imports

8,088

9,893

22.3

78,498

95,016

21.0

Foreign Trade Balance

-2,225

-3,501

57.4

-27,647

-35,579

28.7

Exports/Imports (%)

72.5

64.6

 

64.8

62.6

 

As a result of these developments, during the January-October period, the exports rose by 16.9% with respect to the same period of the previous year and reached USD 59.4 billion, while imports rose by 21% and amounted to USD 95 billion. The exports to imports ratio which was at 64.8% in the first ten months of 2004 came slightly down to 62.6% in the same period of 2005.

Finally, examined with respect to 12-months cumulative figures, as of October, exports amount to USD 71.7 billion, while imports amount to USD 114.1 billion. Thus, on annual basis, foreign trade deficit is at USD 42.4 billion level, while the exports/imports ratio is at 62.9%.

As of end of 2005 we project annual exports to reach USD 72.5 billion and annual imports to amount to USD 116.5 billion. For 2006, on the other hand, we project exports as USD 81.5 billion and imports as USD 130 billion.

Please find attached our note regarding October foreign trade developments.

Best Regards,

(See attached file: ea_foreigntrade_011205.doc)

AHMET BURAK EMEL YAPI ve KREDI BANKASI A.S.

Tel : 212 339 70 00 Fax : 212 339 60 00

www.ykb.com

Economic Agenda: October Foreign Trade Developments

Attachment: ea_foreigntrade_011205.doc (0.50 MB)

AHMET BURAK EMEL aemel@ykb.com

Thursday, December 1, 2005