ISTANBUL, Jan 31 (Reuters) – Turkey’s tourism revenue is set to reach a record $46.3 billion in 2022, despite a trade deficit widening to more than $109 billion as Russian traffic surges and energy surges due to the war in nearby Ukraine. Import costs.
Two milestones have come for the major emerging market economy as President Tayyip Erdogan faces a tight election in May and eventually sticks to the traditional policy of cutting interest rates to achieve current account surpluses.
Analysts said that goal was complicated by rising oil and gas prices in the first half of last year and the lira’s currency slide due to policy.
Revenue from tourists rose 53% from the previous year and surpassed the previous high of $34.5 billion in 2019 before the COVID-19 pandemic hit, data from the Turkish Statistical Institute showed on Tuesday.
Foreigners reached a peak of 45.1 million in 2019, totaling 44.6 million last year, tourism ministry data showed.
All of the COVID-19 restrictions were lifted in 2022 and Russians, second only to Germans in overseas arrivals, came in large numbers due to flight restrictions imposed by the West over Moscow’s invasion of Ukraine.
Hundreds of thousands of Russians are also estimated to have moved to Turkey last year, which is seen as a safe haven for investment in housing and other assets.
Tourism Minister Mehmet Ersoy predicted on Tuesday that 2023 will see $56 billion in tourism revenue.
Big import bill
But while visitors to Turkey’s Mediterranean beaches and historic sites bring in forex, official data showed that energy imports are set to rise more than 90% to $96.55 billion in 2022.
Fuel imports rose 14% in December.
Russia’s invasion raised oil and gas prices early last year, putting pressure on Turkey, which imports virtually all of its energy needs.
Under the normal trade system, the total foreign trade deficit in 2022 rose 137% year-on-year to $109.54 billion, while the December deficit was up 42% from a year earlier.
In 2022, exports are expected to grow by 12.9% to $254.1 billion and imports by 34% to $363.7 billion. The deficit reached $9.7 billion in December.
Under Erdogan’s economic program, unveiled in 2021, Turkey aims to shift from chronic deficits to current account surpluses through stronger exports and lower rates.
But the rate cuts led to a currency crash in late 2021 that saw the lira depreciate 44% that year, with inflation rising to more than 85% in 2022.
The currency’s weakness, expected to depreciate another 29% in 2022, attracted European and Arab tourists last year, sector officials said.
In the fourth quarter, tourism revenue rose 22.2% to $11.37 billion, the data showed.
Additional reporting by Azra Celan, Seyda Caglayan and Hussein Hayatsaver; Written by Jonathan Spicer and Arun Koiyur
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