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5.2.2 Current account dynamics
Turkey's current account deficit in December widened to $2.798bn. A Reuters forecast predicted a deficit of $3.05bn. In November, the deficit was $365mn.
For 2019, Turkey recorded a current account surplus of $1.67bn—as anticipated, the figure confirmed the first annual current account surplus Turkey has seen since 2001.
Turkey's has a long history of current account deficits. The deficit hit $58bn on a 12-month basis in May 2018. The gap worries investors because it makes the economy reliant on hot inflows of capital to finance the shortfall.
Following the summer 2018 currency crisis in Turkey, which drove up the cost of imports and hit domestic demand, the country’s 12-month running current account turned to surplus in May 2019 for the first time in 17 years.
Economists expect the 12-month rolling current account to turn to deficit again as the economy recovers from last year’s recession. But they see only a narrow shortfall in 2020 given a slowdown in imports due to lira weakness and support from tourism income, which has decreased after the peak summer months.
It is anticipated the support from weak domestic demand will decline as economic activity accelerates.
21 TURKEY Country Report March 2020 www.intellinews.com
