Turkey’s trade deficit ballooned to a record level in July on the back of rising energy costs.

The monthly gap reached $10.7 billion, above the $10.6 billion median estimate in a Bloomberg survey and the highest on record according to data going back to 1984. The January-July shortfall was $62.2 billion, a 143.7% increase from a year earlier, Turkey’s state statistics agency said Monday.

Turkish policy makers are trying to boost growth with ultra-loose monetary policy, hoping that cheap credit will find its way to manufacturing and exports. But elevated levels of loan growth and strong domestic demand have also boosted Turkish imports, increasing demand for dollars.

The outlook for foreign trade balance has worsened since Russia’s invasion of Ukraine began in February, sending energy prices to record highs. Russia, a key source of crude oil and natural gas, has allowed Turkey to make some payments in rubles, but details of the arrangement agreed by President Recep Tayyip Erdogan and Russia’s Vladimir Putin in August remain secret.

Key insights

  • Monthly exports last month rose 13.4% from a year earlier to $18.6 billion, while imports grew 41.4% to $29.2 billion
  • Imports of mineral oils, an indicator of Turkey’s energy bill, increased 95.7%, from $4 billion to $7.7 billion with Russia emerging as the top source of total imports
  • Exports of mineral oils and refined products rose 169% to $1.69 billion during the same period
  • Imports of gold and precious metals rose 600% to $2 billion