Economy
Türkiye’s trade gap widens 56% to $11.2B in March
Türkiye’s foreign trade gap widened 56% on an annual basis in March to $11.2 billion (TL 506.07 billion), as imports weighed over exports, official data showed Thursday.
Exports fell 6.4% to $21.9 billion compared with the same month last year, while imports rose 8.2% to $33.1 billion, according to figures from the Turkish Statistical Institute (TurkStat) and the Ministry of Trade.
The export-to-import coverage ratio dropped to 66.1% in March from 76.5% a year earlier.
In the first quarter, exports decreased 3.2% year-on-year to $63.2 billion, while imports increased 4.7% to $91.9 billion.
The trade deficit widened 27.5% in the January-March period to $28.7 billion, with the coverage ratio falling to 68.8% from 74.4% in the same period last year.
Excluding energy products and non-monetary gold, exports declined 5.5% in March to $20.3 billion, while imports rose 11.2% to $25.7 billion. The resulting deficit in this category stood at $5.4 billion, with total trade volume rising 3.2% to $46 billion.
Manufactured goods accounted for 93.7% of total exports, followed by agriculture, forestry and fishing at 3.7%, and mining and quarrying at 1.9%.
On the import side, intermediate goods made up 70% of total imports, while capital goods accounted for 14.6% and consumption goods for 14.9%.
Germany remained Türkiye’s largest export market in March, with shipments totaling $1.82 billion, followed by the United Kingdom ($1.42 billion), the U.S. ($1.38 billion), Italy ($1.22 billion) and France ($996 million).
China was the top source of imports at $4.76 billion, followed by Russia ($3.51 billion), Germany ($2.54 billion), Switzerland ($1.62 billion) and the U.S. ($1.52 billion).
Weeks of conflict have worsened Iran’s already fragile economy, raising the risk of severe postwar fallout, but the country appears capable of withstanding a standoff in the Gulf for now despite a U.S. blockade that has choked off energy exports.
With major fighting paused by an April 8 truce, Iran is locked in a stalemate with the United States and Israel. Talks for a lasting cease-fire are stalled while Tehran keeps the Strait of Hormuz shut and Washington blocks Iranian Gulf ports.
Despite heavy damage to infrastructure and industries and an oil-export squeeze, Iran has plentiful internal supplies, steady trade with neighbors and only limited signs of immediate stress from state-revenue losses caused by the blockade.
If U.S. President Donald Trump expects Iran to blink first in their game of economic chicken, with global inflation rising and midterm elections approaching, he may be waiting a while.
Resistance economy
“I think that they have calculated a longer runway than I think economists or Western policymakers are anticipating,” said Sanam Vakil, head of the Middle East program at the Chatham House thinktank in London, referring to Iran’s leaders.
Facing what they see as an existential threat to the country, Iran’s ruling clerics and Revolutionary Guards are able to use their iron grip on the country to hold out for a sustainable deal from Washington, Vakil said.
“They are quite known to use repressive capacity. They’re relying on people using their savings,” she said, adding that Tehran was falling back on its “resistance economy” approach of relying on internal resources and trading across land borders.
The extent of economic damage from the war – and the likelihood of imminent economic crisis – are hard to gauge given the lack of reliable official data and a partial internet blackout since January.
Vakil said she anticipated a double-digit drop in Iran’s GDP this year. The rial currency, which fell by 70% last year, worsening inflation that contributed to mass protests in January, has dropped by 15% over recent days, but after stabilizing through March, is not far off its prewar value.
There are few other indications of immediate fiscal stress. The authorities have not curbed bank withdrawals, rationed fuel or food staples, or delayed state-salary payments. Supermarket shelves remain full, and offices and banks have stayed open.
Shipping data from April 13 to 25 showed only around 300,000 barrels of oil per day moved out into the Indian Ocean from over 1 million bpd loaded onto tankers during that period. Storage capacity is limited but energy analysts believe Iran may be able to go another two months before curbing production.
Iran built up extra revenue through energy sales when sanctions were waived earlier in the war. Limited volumes of oil are being shipped overland, but not enough to replicate the blockaded sea routes.
A senior source at Iran’s Central Bank told Reuters the country had substantial gold reserves, “tons of it,” that it could deploy if needed and that after decades of evading sanctions, Tehran knew how to maintain imports by paying a little more.
“Iran is the largest food importer in the region. But it is also important to note that Iran is the least food-insecure country in the region,” said Ishan Bahnu, head agricultural commodities analyst at Kpler.
With an expected better-than-usual harvest approaching, the need for wheat imports is reduced, Bahnu said, reducing vulnerability to any extension of the maritime blockade to grain shipments and putting off some foreign currency spending.
The U.S. blockade has so far been limited to Gulf ports, not Iran’s Chabahar on the Arabian Sea, and has focused on oil tankers, Bahnu said, citing monitored vessel movements.
Officials in Türkiye, Iraq and Pakistan told Reuters there was no indication of a slump in cross-border trade yet. Russia has also boosted trade across the Caspian this year, shipping 500,000 tons of corn, 180,000 tons of barley and 4,000 tons of wheat across the inland sea from January to March, according to Russian Agriculture Ministry data, bypassing blockaded Gulf ports.
Intense economic pain
As Trump’s threats of military action increased in January, Iran increased imports to stockpile six months’ worth of essentials, the parliament’s agriculture commission head Mohammad Javad Asgari said in state media this month.
Soon after the conflict began, the Iranian central bank introduced a support package waiving penalties for late payments of small loans and raised bank withdrawal limits to reassure depositors.
Still, on the streets of Tehran, the economic pain is intense. Iranian businesses have been crushed by high prices, supply chain disruption and the internet blackout, causing spiralling unemployment.
“Rising prices of basic goods, especially products like ours that are directly linked to people’s tables definitely put pressure on people,” said Abbas Smaeelzade, a rice and grain seller. Smaeelzade estimated that his sales had fallen by around 40% since the war began.
Mechanic Hossein Amiri said far fewer customers were bringing cars to his workshop compared to before the war. “Our business has basically come to a standstill,” he said, warning that things could get far worse.
Hanging over the authorities is the fear of another round of mass protests. Thousands of demostrators died in January’s unrest.
To avert the impending economic disaster, Iran would need to include sanctions relief in any deal with Washington, Vakil said.
“They do need access to their foreign currency abroad that is housed in banks around the world, but also a degree of sanctions relief. They need to ramp up oil sales, but also be able to trade properly,” she said.
Financial markets are increasingly struggling to put aside the economic impact of the Iran war, as the ongoing shutdown of the Strait of Hormuz extends the biggest-ever disruption to energy supplies.
Two months into the conflict, the global economy faces a toxic mix of slowing growth and high inflation – stagflation.
Even as tech stocks lift world shares, analysts warn that the longer Hormuz remains shut, the greater the recession risk for energy-importing regions.
“The probability of a recession in Europe, the U.K., and parts of Asia is higher than is priced into equity markets,” said RBC BlueBay’s head of market strategy Mike Bell.
Here is how the risks are shaping up across markets:
Oil watch
Oil remains the key barometer.
Before Thursday, Brent crude was trading at around $112 a barrel, more than 50% above pre-war levels, and continues to rise as the war drags on. Early on Thursday, it reached the highest level since the conflict started, surpassing $125 before easing moderately.
High energy prices threaten growth by squeezing consumers and companies while fuelling inflation.
Citi says it’s considering an adverse scenario in which Brent climbs to $120 through year-end, cutting global growth to between 1.5% and 2% and lifting headline inflation to nearly 5%.
Gas prices in Europe and Asia have also risen. Farmers face a second surge in fertilizer prices in four years, while countries including Sweden have warned of potential jet fuel shortages.
Financial conditions
Despite sharply higher borrowing costs, the shock has yet to show up clearly in overall financial conditions.
Market-based measures – which track how asset prices affect funding availability and future growth – tightened to their most restrictive levels since last spring in the U.S. in March, but have since stabilised, helped by April’s equity rally, according to a closely watched Goldman Sachs index.
Conditions have tightened modestly in the eurozone and Japan, driven by rising borrowing costs. Britain stands out, with a much sharper tightening that points to a heavier growth hit.
U.S. faces more inflation
The impact varies by exposure to energy flows through Hormuz. In the U.S., gas prices are now below pre-war levels.
Jefferies chief European economist Mohit Kumar said both the scale and nature of the stagflation shock differ across regions.
“Inflation will still be higher in the U.S., but that’s an oil price impact; the impact on growth is much less in the U.S. than in Europe.”
U.S. business activity picked up in April, though output prices jumped. Consumer inflation expectations for the year ahead jumped to 4.7% this month from 3.8% in March, while market-based gauges have also moved higher.
JPMorgan CEO Jamie Dimon said this week that the worst-case scenario of stagflation remained.
Europe in a tight spot
Europe’s reliance on energy imports leaves it especially vulnerable, with data already pointing to a stagflationary hit.
Data on Thursday is expected to show eurozone inflation nearing 3%. Contracting business activity, tighter bank lending criteria, and surging inflation expectations signal mounting pressure.
Germany’s IMK institute sees a 34% chance the bloc’s largest economy slips into recession in the second quarter, up from 12% in March.
ING’s head of global macro, Carsten Brzeski, said another month of Hormuz disruption would likely trigger at least a technical eurozone recession.
U.K. business activity has held up better so far, but risks are rising. The International Monetary Fund (IMF) hit Britain with the biggest growth downgrade among rich economies.
Reflecting inflation worries, borrowing costs in Europe have risen faster than elsewhere as traders bet on higher U.K. and eurozone rates. Britain’s two-year yields are up 90 basis points since the war began.
Equity markets, perhaps more focused on growth, are down 4% in the eurozone and 5% in Britain, while U.S. shares have risen.
Asia hit hard, China outlier
Asia, which typically takes about 80% of Gulf oil exports and 90% of LNG shipments, is bearing the brunt. Parts of South and Southeast Asia are already facing energy shortages.
Foreign investors are pulling out of Thailand, and the Philippines is among the hardest hit, and Indian companies could be under pressure.
Elsewhere, the Bank of Japan raised its inflation forecasts and looks set to raise rates.
China is the exception. Backed by ample oil reserves and a diversified energy mix, it grew 5% in the first quarter. Investors are betting on Chinese battery and electric vehicle companies, while low inflation has helped Chinese bonds rise as others fell.
Still, China is not immune. Higher energy costs could squeeze already thin factory margins just as global demand for its exports slows.
The Federal Reserve kept its benchmark interest rate unchanged for a third consecutive meeting but signaled potential cuts in the coming months, as policymakers recorded their highest level of dissent since 1992.
The Fed on Wednesday kept its short-term rate at 3.6% and retained language in its statement suggesting the next move would be a rate reduction. Three officials dissented in favor of removing the reference to a future cut, while a fourth, Stephen Miran, dissented in favor of an immediate rate cut on Wednesday.
The dissents underscore the level of division on the Fed’s 12-member rate-setting committee ahead of the departure of Chair Jerome Powell, whose term ends May 15. The Senate Banking Committee approved his successor, Trump appointee Kevin Warsh, earlier Wednesday on a party-line vote. Warsh has argued in favor of rate cuts, as Trump has demanded.
“Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook,” the Fed said in a statement after its two-day meeting. “Inflation is elevated, in part reflecting the recent increase in global energy prices.”
Warsh has promised “regime change” at the central bank and may make sweeping changes to its economic models, communications strategies, and balance sheet, but he will likely find it harder to implement the rate cuts Trump seeks with inflation topping 3%, above the Fed’s target of 2%.
Separately, the Senate Banking Committee is scheduled to vote on the nomination of Kevin Warsh to succeed Powell. The nomination is expected to be approved on a party-line vote, and will then be taken up by the full Senate next month. President Donald Trump nominated Warsh, a former top Fed official, in January. Last year, Warsh echoed Trump’s calls for the Fed to lower its key interest rate, leading many Democrats in Congress to question how independently he will operate as Fed chair.
Gold is known as a top safe haven asset in times of volatility, but with the war in the Middle East, this classic standing has been challenged as investment volumes fell in the first quarter, industry data showed Wednesday, as the conflict forced some investors to liquidate holdings to raise cash.
Investment volumes fell by 5% during the quarter, according to the World Gold Council (WGC), despite gold having set a record high in January as investors sought refuge from a weak dollar and U.S. President Donald Trump’s erratic policy shifts.
“Hefty outflows in March reversed much of the sizable January and February inflows” into gold exchange-traded funds (ETFs), an easy means to invest in the precious metal, the council said in its quarterly report.
And that was linked in particular to North American funds.
“Oftentimes, because gold is so widely accepted, it is the first thing that you sell when you need a certain access to cash or to liquidity,” said World Gold Council expert Juan Carlos Artigas.
Following the U.S.-Israeli attacks on Iran at the end of February, Tehran closed traffic through the Strait of Hormuz, through which a fifth of the world’s oil and liquefied natural gas (LNG) normally flows.
That sent oil and gas prices rocketing higher and disrupting markets, forcing many investors to raise cash to settle their positions.
The prospect of the U.S. Federal Reserve (Fed) raising interest rates in response to higher inflation boosted the dollar, making gold more expensive for investors who don’t hold dollars.
If demand for gold dropped by volume, the value of purchases jumped by 62%.
Gold touched a new record just shy of $5,600 per ounce at the end of January, and averaged $4,873 per ounce over the quarter.
High prices, driven largely by investment holdings, hit demand for jewellery, however.
The jewelry market was also disrupted by the war, with the Middle East a key shipping hub.
Gold demand in Türkiye reached a new record in value terms in the first quarter, driven by strong investor appetite for bar and coins, industry data showed on Wednesday.
The precious metal is seen as a safe-haven asset in times of volatility, and Turks have long seen it as a portable, tangible store of wealth.
Bar and coin demand in Türkiye rose 29% year-over-year in the January-March period to 26.1 metric tons, according to a report by the World Gold Council (WGC).
That marked the highest level in seven quarters.
In value terms, the bar and coin demand hit a record $4.5 billion, based on an average gold price of about $4,872 per ounce during the quarter, the report said.
Gold touched a new record just shy of $5,600 per ounce at the end of January, as investors sought refuge from a weak dollar and U.S. President Donald Trump’s erratic policy shifts.
However, it has been declining since late February after the Iran war forced some investors to liquidate holdings to raise cash.
Türkiye has among the highest levels of household gold ownership in the world. Record gold prices are said to have lifted the value of the Turks’ holdings to nearly half the size of Türkiye’s $1.57 trillion economy.
The precious metal, given as gifts at weddings and passed down through generations, is a hedge against inflation and a permissible investment under Islamic tradition that spurns interest-bearing banking.
According to the Turkish central bank, about $600 billion of the total stock is “under‑the‑mattress,” or “under-the-pillow” in Turkish: gold held by households and companies outside the banking system.
Worldwide, gold demand also reached record levels in monetary terms in the first quarter, according to the WGC.
Including over-the-counter (OTC) transactions, the demand increased 2% year-over-year to 1,231 tons in the first quarter, while the total value of demand surged 74% to a record $193 billion as rising prices boosted market volumes.
Physical investment demand, including bars and coins, climbed 42% annually to 474 tons, representing the second-strongest quarterly performance on record. The increase was largely driven by Asian investors seeking protection against market volatility and inflation concerns.
Gold-backed gold exchange-traded funds (ETFs), an easy means to invest in the precious metal, recorded inflows of 62 tons during the quarter. However, the figure remained well below the 230 tons recorded in the first quarter of 2025, mainly due to heavy outflows from U.S.-based funds in March.
Central banks remained net buyers of gold despite increased selling activity during the quarter, purchasing a net 244 tons, up 3% from a year earlier.
High prices, driven largely by investment holdings, and the Iran war hit demand for jewellery, however.
The WGC said jewelry demand volumes fell 23% from a year ago. Total spending still increased 31% as higher prices offset lower purchases.
Following the U.S.-Israeli attacks on Iran at the end of February, Tehran closed traffic through the Strait of Hormuz, through which a fifth of the world’s oil and liquefied natural gas normally flows.
That sent oil and gas prices rocketing higher and disrupting markets, forcing many investors to raise cash to settle their positions.
The prospect of the U.S. Federal Reserve (Fed) raising interest rates in response to higher inflation boosted the dollar, making gold more expensive for investors who don’t hold dollars.
The process of UniCredit’s takeover of Germany’s Commerzbank is “unstoppable” and will prevail because the business logic is clear, the chief executive of the Italian bank said on Wednesday.
“But if it doesn’t work out, someone else will come along. That’s the reality of the market. Consolidation is inevitable,” Unicredit CEO Andrea Orcel told an interview with Frankfurter Allgemeine Zeitung.
UniCredit and Commerzbank have been in a standoff since 2024, when the Milan-based bank began building up a stake in the German lender and pressed for a merger.
UniCredit currently owns a 27% stake in Commerzbank, making it the largest shareholder in the Frankfurt-based bank. Including derivatives, the stake is 32.64%, according to a filing last week.
A direct stake of more than 30% treshold would trigger a mandatory takeover offer under German law.
In mid-March, UniCredit announced a voluntary share exchange offer for all outstanding shares.
Commerzbank has been resisting the Italian bank’s advances, aiming to remain independent. Its management, employees and the German government all oppose a potential hostile takeover.
The German government itself owns 12% of the bank’s shares.
Orcel earlier argued that consolidation is needed to create stronger European banks capable of competing with large U.S. rivals.
UniCredit shareholders are due to vote on a required capital increase for the bid at an extraordinary general meeting on May 4.
Commerzbank has said discussions with UniCredit had failed to demonstrate benefits beyond what it could achieve independently, while also warning of significant execution risks tied to a merger.
It also criticized UniCredit for acting without prior coordination, saying this had undermined trust.
Commerzbank plans to present updated financial targets alongside its first-quarter results on May 8.
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