In November, Turkey’s trade balance recorded a deficit of $8 billion, falling short of the expected $7.8 billion. This situation may impact the sustainability of Turkey’s economic recovery, as it faces challenges from external demand and high domestic inflation.
Exports in November reached approximately $15 billion, while imports rose to about $23 billion. The increasing trade deficit highlights ongoing inflationary pressures and the impact of a weakening Turkish lira, which has raised the cost of imports.
Impact On Turkey’s Economy
These trade figures may pose future challenges for Turkey’s economy, as trade deficits are often linked to larger current account deficits. This could put additional strain on the lira and may require intervention from economic policymakers.
As Turkey manages these economic issues, observers will watch for responses from the Central Bank or government to stabilise the economy and tackle the trade imbalance. The November trade balance results show the persistent difficulties in Turkey’s economy and the importance of monitoring external trade dynamics closely.
The November trade deficit of $8 billion is a clear signal of renewed pressure on the Turkish Lira. This figure, coming in worse than the expected $7.8 billion, reinforces our concerns about the country’s persistent current account issues. For us, this confirms the underlying economic strain as we head into the new year.
We see this data against a backdrop of stubbornly high inflation, which the latest reading for December 2025 showed was still running at 68% year-over-year. Even with the Central Bank’s policy rate holding at 50%, these trade figures suggest that orthodox policies are struggling to cool import demand. This imbalance makes the Lira particularly vulnerable to negative sentiment.
Future Economic Outlook
In the coming weeks, we should consider positions that would benefit from further Lira weakness against the dollar and euro. This could involve looking at USD/TRY call options, anticipating a move above the current 40.00 level. However, we must be aware that implied volatility is already elevated, making these positions costly to enter.
The main risk to this view is a more aggressive policy response from the Central Bank of the Republic of Turkey. We will be watching their January 2026 meeting closely for any signs of another unexpected rate hike or new currency stabilization measures. Such a move could cause a sharp, though perhaps temporary, reversal in the Lira’s depreciation.
Looking back from our perspective at the end of 2025, we remember the significant policy U-turn that began after the 2023 elections. That period showed how quickly authorities can change course, leading to massive swings in the currency. This historical volatility means we must remain nimble and not become overly committed to a single direction.
The upcoming releases of December’s full trade data and January’s inflation report will be the next major catalysts. These figures will be critical in determining if this negative trend is accelerating. We will need to see a significant improvement in these numbers to reconsider a bearish outlook on the Lira.
