Turkey’s foreign trade deficit in May expanded by 43% y/y to stand at $7.31bn, mainly due to a strong 237% y/y growth rate in imports of gold and other precious metals to $2.23bn, data from national statistics office TUIK showed on June 30.

The trade deficit is the main driver behind Turkey’s chronic current account deficit problem. Prior to May, the foreign trade gap increased by 17% y/y to stand at $4.95bn in April. The deficit went through a temporary contraction in March, having registered expansions in the first two months of this year. 

The deterioration in the foreign trade shortfall came despite the recording of a 13% y/y rise in Turkish exports to $13.6bn in May. Imports climbed 22% y/y to $20.9bn in the month.

Shipments to the EU, which absorbed 45% of Turkey’s exports in May, increased by 4% y/y to $6.13bn. Exports to Russia climbed 72% y/y to $231mn in May and rose by 44% y/y to reach $892mn in the first five months of 2017.

TUIK also reported that Turkey’s exports to the Middle East rose by 19% y/y to $3.29bn in May.

The country’s energy import bill, meanwhile, increased by 38% y/y to $2.93bn in May, with Turkey paying 38% more for energy in the first five months of 2017 compared with the same period of 2016, TUIK data showed.

Across January-May, exports increased by 10% y/y to $64bn while imports were up 11% y/y to $89bn, resulting in a foreign trade deficit of $25bn, a 16% increase on a year ago.

Turkey’s foreign trade shortfall for the full year of 2016 declined by 11.6% to $56.1bn. The government is forecasting a foreign trade gap of $61bn for this year, with exports reaching $153bn and imports amounting to $214bn.

Turkey’s GDP expansion of 5% y/y in Q1, which was driven by net exports, marked the best economic growth performance seen since the second quarter of 2016, which delivered 5.3% y/y, and it followed Q4 2016’s rebound of 3.5%. The figures fuelled hopes that the country’s $857bn economy may be on the growth path again, having faltered following last summer’s attempt at overthrowing the government.

Exports, which grew 2.3% y/y in real terms in Q4 of last year, increased by a stronger 10.6% y/y in the first quarter thanks to the depreciation of the Turkish lira while imports rose by 0.8% y/y in Q1 versus 3.3% in the previous quarter.