Page 22 - TURKRptMay20

The figure was more than a Reuters forecast for a deficit of $0.99bn.
In March, the central bank revised current account data going back to 2013 as part of a new calculation method​, which led to a decline in historical deficits and a rise in the 2019 surplus. The revisions totalled some $44bn between 2013 and 2019.
For all of 2020, the median estimate of seven economists polled by Reuters was for a current account deficit of $10bn, down from $13.8bn in last month's poll. Forecasts ranged between deficits of $500mn and $17bn.
Turkey's foreign trade deficit rose 72% y/y in February to $2.98bn according to the general trade system, data from the official statistics institute, TUIK, showed.
Nafez Zouk, of the consultancy Oxford Economics, was quoted by the Financial Times as saying that Turkey was in ​danger of a “classic balance of payments crisis”​, echoing warnings delivered by other analysts in recent months that by not learning the lessons of the mistakes that led up to its currency crisis of just under two years ago, the Erdogan administration was on course for a repeat.
“​The fall in export revenues from goods exports to Europe and from the fall in tourism​ are not going to offset the windfalls you get from [the crashed] oil prices [as a big energy importer],” he said.
5.2.3​ Capital flight dynamics
Although the Turkish government is representing Turkey’s current account deficit as under control—thanks to its habitual employment of a change in methodology—the pointedly ignored capital account continued to give off bad signals in February prior to the “COVID-19 sudden stop” in March.
The capital account was at +$3bn in the month but that was only because of the Treasury’s $4bn eurobond sale and transfers of $3.2bn made by banks from offshore branches.
“Major outflows”​. “Apart from those [items], the overall capital account actually witnessed major outflows,” Seker Invest said on April 14 in its daily bulletin.
Despite relatively limited redemptions in February, both the banking and corporate sectors attained low rollover ratios in new borrowing at 69% and 65%, leading to a total $0.7bn outflow (including short-term loans).
There was also a $0.5bn outflow via banks’ net eurobond issuance.
The banks have remained net debt payers in each month since May 2018. Since then, they have redeemed a net $31bn, including eurobonds.
Non-residents sold $0.7bn worth of equities and $1.7bn of T-bonds in February, while some $1.2bn in capital outflows took place through trade loans, formerly a financing item in previous months.
At the same time, net FDI inflows stood at a mere $0.3bn.
“There is clear evidence that Russia and Turkey are struggling to contain [COVID-19] outbreaks... The escalation of the coronavirus outbreak in Turkey has spooked investors and sparked rumours that Turkey may turn to the IMF for financial support... Meanwhile, external financing conditions remain
22​ TURKEY Country Report​ May 2020 ​ ​www.intellinews.com