Page 39 - TURKRptDec19

The 12-month rolling current account balance reached a deficit of $58bn in May 2018, but it has plunged since the Turkish lira crisis in the summer last year, which drove up the cost of imports. It turned to a surplus in June for the first time in nearly 17 years. The figure has remained positive since but it is anticipated that as the economy continues to recover from the recession that followed the balance of payments crisis it will start heading back towards negative territory.
There was an annual current account surplus of $5.9bn in September.
The median estimate in a Reuters poll last week for the annual current account at the end of 2019 stood at a surplus of $100mn. The government has forecast the account will show a surplus of $1bn in 2019, compared to a deficit of $27.6bn in 2018.
Enver Erkan, economist at Tera Investment, said in a note to investors that he supported the prospect that the current account surplus would decline and turn to a deficit in coming months. “After October, [the positive impact from tourism revenue] goes away and, in addition to that, recovery in the economy and growth becoming palpable, domestic demand picking up will have an impact on us posting a deficit in the current account balance again.”
Turkey’s trade deficit is the largest component of the current account. It more than tripled from a year ago to stand at $1.77bn in October, Trade Ministry data showed.
ING bank chief economist in Turkey Muhammet Mercan said in a note: “Overall, September data shows a continued correction in external imbalances though we will likely witness a gradual reversal in the period ahead given an ongoing recovery in the credits with the CBT’s [central bank’s] macro prudential move incentivising lending by linking required reserve ratios and remunerations to credit growth as well as the ongoing rate cut cycle. Despite the decline, Turkey’s total financing needs remain high and sentiment is somewhat fragile as indicated by the weak capital flow outlook in recent months, despite a supportive shift in the global backdrop.”
The import rate switched to annual growth in August at 1.5% y/y. It reached 7.8% y/y in October.
Coupled with the slowdown in export growth, it brought about an expansion of the trade deficit to 6.6% y/y in September and 256% y/y in October, following
39​ TURKEY Country Report​ December 2019 ​ ​www.intellinews.com