Central Bank: Strong exports offset energy import surge

The Central Bank of Türkiye highlighted in a blog analysis published Monday that the nation's foreign trade balance strengthened during the second quarter despite mounting geopolitical pressures, as resilient export revenues and a restrained domestic demand environment counterbalanced a sharp spike in energy import costs triggered by the ongoing regional conflict.

War fallout hits energy markets

The analysis noted that the US-Israel-Iran war, which erupted at the end of February 2026, initially threatened to weaken Türkiye's external trade outlook through disrupted supply chains and volatile commodity prices. "However, second-quarter data painted a different picture. Despite a marked increase in energy imports, exports remained strong and the foreign trade balance improved," the bank said, pointing to Brent crude prices soaring 55.2% year-on-year and natural gas jumping 28.2% during the period.

Energy imports adjusted for calendar effects climbed 32.4% annually, reflecting both long-term supply agreements, spot market purchases, and inherent lead times in procurement contracts, though the bank observed that recent price stabilization suggests growth in energy imports may slow in coming months with lagged effects still posing short-term upside risks to the external balance.

Export realignment offsets shocks

The study emphasized that energy prices alone do not dictate external balances, contrasting the current situation with 2022 when the Russia-Ukraine war placed heavier sustained pressure on the current account through simultaneous supply shocks. "This divergence was primarily driven by exports," the analysis stated, noting that shipments to Middle Eastern countries recovered in the second quarter after dropping sharply in March while European demand surged amid global supply chain realignments.

Firm interviews cited in the report indicated that the closure of the Strait of Hormuz, extended delivery times from the Far East, and elevated freight and insurance costs redirected orders toward Türkiye, with businesses initially viewing the demand spike as temporary. Precautionary buying supported chemical products and base metal exports while supplier diversification strategies boosted apparel and textile shipments, and the defense industry's share of total exports climbed 2.3 percentage points to 4% over the past four years.

Domestic demand cools import growth

The improvement also stemmed from shifting import composition, as non-energy imports declined amid sluggish domestic consumption driven by tight monetary policy and elevated borrowing costs. Intermediate goods imports excluding gold and energy held steady, while investment and consumption goods purchases dropped alongside weak credit card spending indicators confirmed by high-frequency data, with Purchasing Managers' Index surveys showing production contracted in the second quarter even as export order expectations improved.

"In sum, the adverse impact of rising energy prices on the foreign trade balance in the second quarter was largely offset by the robust course of exports," the bank said, adding that restrictive monetary policy has reined in consumer demand and altered import composition. "Taken together with the recent normalization in energy prices, these developments suggest that the upside risks posed by the war to the current account deficit have diminished compared with a few months earlier," the analysis concluded.