(Bloomberg) -- Turkey’s foreign trade imbalance continued to worsen last month as cheap credit and retail investors’ search for a hedge against inflation continued to fuel demand for gold.
Trade deficit rose to $4.88 billion in September from $1.67 billion a year earlier, according to preliminary data published on Friday. The gap during the Jan.-to-Sep. period was $37.9 billion, 80% higher than 2019.
Households and businesses turned to hoarding gold and foreign currencies earlier this summer, a method popular among Turks trying to protect value of assets at times of currency volatility and elevated levels of inflation. The rush for the precious metal risks further deterioration in Turkey’s current account and might add to forces destabilizing the lira, which lost more than a fifth of its value against the dollar this year.
Below are some of the highlights from the trade ministry report:
- Total imports rose to $20.9 billion in September from $16.9 billion a year earlier
- Exports rose by 4.84% to $16 billion during the same period
- Imports of precious metals including gold rose by 221% to more than $3.5 billion, driving the increase in shipments from abroad
- Exports were led by $2.2 billion worth of motor vehicle sales, which continue to be the backbone of Turkey’s shipments to European markets
The lira was nearly flat at 7.7483 per dollar as of 2:05 p.m. in Istanbul. The currency was the worst performer among emerging market peers during the third quarter with more 11% of depreciation.