Germany was the country to which we export the most in October, followed by England, Iraq and the USA. In import items; Germany took the first place in October 2020, followed by China, Russia and the USA. Looking at the goods groups, it is seen that exports of investment goods and raw materials and consumption goods increased, while imports increased by double-digit in all categories (investment, consumption) excluding raw materials.
The foreign trade deficit continues to increase on an annual basis. Since the deterioration trend in the foreign trade deficit continues due to the increase in imports, the current situation is also unfavorable in terms of the current account deficit outlook. Imports are growing faster than exports due to the high demand effect, along with the economic recovery, and the increase in gold imports throughout the year. In the October period, it is seen that gold imports, which increased compared to the previous year, rose from 1.63 billion USD to 2.13 billion USD. Especially during the pandemic period, the increase in gold prices with the need for protection has been effective in the growth of this demand, but in an environment where gold prices decline or stabilize globally, this effect will decrease slightly. On the other hand, despite the decline in energy imports compared to the previous year, the increase in imports of machinery, equipment and electronic products also explains the faster increase in imports.
Although exports are in a slightly more limited trend with the recovery process of global economies, the demand that will slow down with increasing epidemic measures and new quarantines in Europe poses a risk to the outlook. In this context, export may be suppressed with the decreasing demand in the near future, where Covid increases its impact. Import, on the other hand, can be expected to be suppressed by the increase in interest rates and the impact of measures to reduce imports. However, due to the effect of exchange rates, inflation pressures will continue over input costs, especially in terms of raw material imports. Either the import volume will shrink or the increase in exchange rates will increase the import bill. In the following months, we expect the suppression of domestic demand and foreign demand together to reduce foreign trade volume.
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