Istanbul: Turkey may struggle to narrow its current-account deficit as mounting tensions with Egypt make it harder for traders to reach the Middle East, the destination for about a fifth of Turkish exports.
Turkish exports shipped via Egypt's Damietta port to customers in the country and throughout the Arabian Gulf dropped as much as 30 per cent after the army toppled Islamist President Mohamed Mursi on July 3, triggering violence, according to data of Mersin, Turkey-based OSF International Logistics Services. Exports to 10 Middle Eastern trade partners shrank five per cent in June, state statistics office data show.
Turkey's reliance on the Middle East has increased as the ratio of exports to countries including Iraq, Saudi Arabia, Kuwait and Egypt more than tripled in the past decade, according to data from the Ankara-based statistics office. The country has been struggling to reduce its current-account gap as it faces the highest borrowing costs in 19 months and the worst- performing currency after South Africa's rand among emerging markets in Europe, the Middle East and Africa this year.
"Exports through Egypt can only continue if tensions there do not increase," Ali Serdar Kocaoglu, general manager of OSF, said by phone on August 22. Turkish shipments to 10 major markets in the Mideast increased almost 15-fold to $29.5 billion during the decade to 2012, making up 19 per cent of the nation's total sales abroad, according to government data. Exports rose 7.6 per cent in the first half from a year earlier, down from 61 per cent growth in 2012 even after the civil war in Syria closed that trade route.
Iraq, which shares a 330-kilometre border with Turkey, accounted for $10.8 billion of sales in 2012. The bulk of the remaining shipments to the nine Middle East markets go through Egypt, with volume falling 30 per cent since the beginning of last month, Kocaoglu said.