The annual foreign trade volume in year 2005 was realised as $190 billion. (Imports: $117 billion, Exports: 73 billion)

Export of goods increased by 15.8% in 2005. On the other hand, shuttle trade revenues fell by 10.5%. In other words, growth in total export of goods amounted to 14.2% in 2005 over 2004.

Prices played a significant role in growth of exports. According to index data, exports unit value index rose by 4.7 per cent in 2005 over year 2004. Thus, the real increase in exports was 8.1% in 2005.

However, disadvantage of highly appreciated Lira was primarily offset by surge in productivity and low levels of real wages.

Exports of motor vehicles, refined petroleum and petroleum products, machinery/equipment and food products/beverages were the largest contributors to the growth in total exports in 2005.

In addition, increase in export of textile products and apparel, which have a large share in overall exports, remained below the overall export growth rate.

In other words, 8.9 percentage points of the overall growth rate of exports stemmed from the above mentioned sectors.

Increase in export prices in 2005 brought about a nominal export growth beyond the real growth. Increase in prices was more apparent in petroleum products, agriculture and the farming of animals, food and beverages, fabricated metal products, electrical machinery and appliance and mineral products than others.

As for exports by country groups, growth in exports to the EU countries, which have the largest share in total exports, remained below the growth in total exports. The share of this group in total exports dropped by 2.1 percentage points. This was mainly due to low levels of domestic demand in EU countries in 2005.

On the other hand, the share of exports to Middle Eastern countries increased by 27%

Increases in exports to Italy, England and Russia were also remarkable in 2005. Motor vehicles and fruits and vegetables had the highest shares in exports to these countries.

Imports (including freight and insurance cost), increased by 19% in 2005. Adding the “other goods” item related to freight and insurance revenues and financial leasing, the rate of growth in the total imports of goods amounts to 20.1 per cent.

In 2005 overall, price movements were found to be influential in the nominal growth of imports. According to foreign trade index data released by TURKSTAT, the imports unit value index rose by 7 per cent. According to the quantity index excluding price movements, the real increase in imports was 10.7 per cent.

Appreciated YTL encouraged imports while the increase in industrial production was the main factor behind the growth of imports of intermediate goods, which comprise 70 per cent of total imports. In 2005, the annual increase in total industry and manufacturing industry production were 5.5% and 4.9%, respectively.

Basic metal industry products, chemicals and chemical products and machinery-equipment, the mining and quarrying sector which includes crude oil, made the biggest contribution to the increase in imports.

Imports of the basic metal industry, which displayed a significant rise as of the last quarter of 2004, grew by 22.4 per cent in 2005. A significant rise in the activities of domestic construction sector was effective in the increase in imports of the basic metal industry. Moreover, increases in world metal prices led to nominal rises in the imports by the sector.

Compared to 2004, a sluggish trend was observed in imports by automotive and spare parts sector in the first half of 2005. In the said period, imports of automobiles declined by 29.9 per cent, whereas imports of transportation vehicles’ spare parts increased by 20.6 per cent. However, in the second half of 2005, imports of transportation vehicles’ spare parts declined parallel to the decline in automobile exports. In the same period, automobile imports grew by 37 per cent.

We believe that imports of gold increased by 11.1% in 2005. Especially the depreciation of the US dollar, which was observed from 2002, led to a demand for gold as well as an increase in gold prices.

Similar to 2004, crude oil prices remained high in 2005. Although volume of crude oil imports declined by 2.2%, the cost of imports increased by 42 per cent in 2005. In other words, the additional burden imposed by a 45.3% increase in crude oil price in 2005 over 2004 was approximately $ 2.7 billion in 2005.

Import prices of plastic and rubber products, and manufactured metals also increased significantly in 2005. On the other hand, import prices of food products, radio, TV, communication equipments and appliances and electrical machinery and appliances decreased remarkably.

In 2005, imports from the EU countries grew slightly less than the growth rate of overall imports over 2004. Thus, the share of imports from EU in total imports decreased in 2005.

However, imports from non-member European countries and Asian and Middle Eastern countries contributed significantly to growth of imports in 2005.

Imports from China were remarkable, having contributed 2.4 percentage points to overall growth of imports. The large share of Germany continued, while imports from Russia, South Korea, Switzerland, Iran and Saudi Arabia recorded increased.

Thanks to increase in tourism and construction revenues by 14.2% and 20.7%, respectively, trade balance in services increased to USD 14 billion in 2005. However, trade balance in financial and other services in the same period declined remarkably.

In 2005, tourism revenues rose by 14.2%. The number of departing tourists increased by 19.1%. Propensity to spend displayed a downward trend and average spending per tourist declined by 4.1%, having gone down to $ 752.

The main reason for a deficit of USD 5.7 billion in the investment income account in 2005 was interest expenditures.

In 2005, portfolio revenues rose by 40.5% and amounted to $2.4 billion, whereas portfolio expenditures increased by 14.5 per cent and amounted to $ 3.3 billion. Thus, net portfolio revenues displayed a negative balance in 2005.

The current transfers which were composed of workers’ remittances and official transfers increased by 30.3% and yielded a surplus of $1.5 billion in 2005.