(Bloomberg) -- Turkey’s trade deficit continued to widen in November, further putting President Recep Tayyip Erdogan’s goal of hitching the economy to a boom in exports at risk.
Exports rose 1.9% to $21.9 billion, according to preliminary Trade Ministry data, with the rate of growth slowing for a fifth consecutive month due to a drop in shipments to Turkey’s biggest export market.
Meanwhile imports rose by 14% to $30.7 billion, boosted by an increase in shipments from Russia, a key source of oil and gas.
That left a trade deficit of $8.8 billion in November, up 62% from last year. The 11-month deficit rose 154% to $99.9 billion.
The slowdown in Turkey’s export machine gives impetus to complaints by business leaders that an overvalued currency is eroding competitiveness. Speaking to BloombergHT in November, Mustafa Gultepe, head of the Turkish Exporters’ Assembly, said exchange rates should be allowed “to rise in tandem with inflation” that’s currently at 85.5%.
Read more: Turkey’s Export Machine Sputters and Overvalued Lira Takes Blame
Barclays Plc analyst Marek Raczko said in a note last month, the lira needs to depreciate by a further 11% by year-end to keep the country’s economy competitive.
While nominal depreciation in the lira has kept it among the worst performers among emerging markets this year, a policy paradox has emerged in Turkey as a result of measures to promote the use of the local currency and interventions by the central bank, which Bloomberg Economics estimates at as high as $75 billion in the first eight months.
The safeguards in place mean the lira hasn’t weakened enough to reflect inflation differentials and changes in the value of the currencies of Turkey’s trade partners. At stake for exporters is the competitiveness of their products at a time when demand abroad is already sagging as recession risks mount for its main trading partners.
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