Why did Turkey restrict gold imports as it rolled new economic measures?

Two months after the appointment of a new team to fix the inflation-plagued Turkish economy, price increases are on the rise, and Ankara continues to rely on market interventions and restrictions to ease economic woes instead of restoring free market functionality.

The government moved this week to limit gold imports in a bid to curb Turkey’s widening current account deficit, which reached nearly $38 billion for the first five months of the year. The high level of gold imports has played a major role in expansion of the current account gap as Turks have come to view gold, along with hard currency, as a refuge against inflation and the depreciating Turkish lira.

Gold imports totaled 181.1 tons in the first seven months of the year, compared to an annual average of 192.3 tons for the period 2013-2022, according to official data. The gold imported this year through July was worth $15 billion, the equivalent of the cost of 20% of all imports. 

A presidential decree published on Tuesday introduced a 20% additional fee for some gold imports on top of existing duties. It covers gold jewelry and parts as well as some metal products plated with precious metals originating in non-European Union countries and countries without a free trade agreement with Turkey. Trade Ministry officials, quoted by the state-run Anatolia news agency, said the measure aims to curb the current account deficit and help achieve local production and employment targets.