Page 31 - TURKRptNov19
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5.2.2 Current account dynamics
Turkey’s annualised current account surplus hits record $5.1bn in August. Turkey’s current account surplus on an annual basis hit a record in August as the country’s hard-pressed consumers continued to limit orders for imports.
The current account balance saw a surplus of $2.6bn in the month, taking the annualised surplus to $5.1bn. That’s the biggest ever figure recorded in the data series going back to 1999, according to Turkey’s central bank, which released the figures on October 11.
The median of 10 estimates in a Bloomberg survey was for a monthly surplus of $2.85bn in August.
Last year’s lira crash and the aggressive monetary tightening that followed have hit domestic demand hard. A massive economic adjustment is under way.
A year ago, the country was dealing with a current account deficit of $51.6bn on an annual basis.
Central bank data also showed that official reserves rose by $254mn and capital outflows were $1.34bn in August. Net errors and omissions, or capital movements of unknown origin, showed a monthly outflow of $800mn, making year-to-date inflows $2.59bn.
Turkey's annual current account deficit, which hit $58bn in May 2018, has dropped dramatically in the wake of the summer 2018 currency crisis that saw the Turkish lira lose nearly 30% of its value against the dollar last year, causing the cost of imports to surge. It swung to a surplus in June 2019.
The 12-month cumulative current account turned positive in June, after nearly 17 years of deficits, thanks to a boost from tourism income in the peak summer months.
Turkey’s current account deficit has long troubled investors because its extent leaves the economy reliant on hot inflows of speculative capital to finance the shortfall.
Hilmi Yavas, an economist at brokerage Yatirim Finansman, told the news agency he expected another C/A surplus in September, saying: "There is a recovery in domestic demand as credit channels opened following interest rate
31 TURKEY Country Report November 2019 www.intellinews.com
