Turkey’s current account gap sees 6-year lows

ANKARA

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Turkey’s current account deficit narrowed to the lowest level of the last six years in August to $163 million amid a slowing down in the economy and a sharp decrease in the foreign trade gap. 

The country’s foreign trade deficit was announced as $4.9 billion in August, a decrease of around 40 percent from the same month in 2014 due to a plunge in oil and a rise in car exports. 

The 12-month rolling current account deficit went to $43 billion, data from the Central Bank showed on Oct. 14. In July, the balance was $3.2 billion. In 2014, Turkey’s current-account gap was $45.8 billion. 

“None of this should be a surprise,” said Bora Tamer Yılmaz, an economist with Ziraat Securities, who had forecast a zero deficit for the month of August. 

“Declining commodity and energy prices, as well as an improved import-to-export ratio all contributed to the narrowed deficit,” he said, as quoted by Anadolu Agency. 

The deficit in goods narrowed to $3.6 billion, down by $2.6 billion from August of the previous year. The deficit in services indicated a net surplus of $3.9 billion, narrowing by $583 million compared to the same month in the previous year, according to the Central Bank’s data. 

Under services, travel recorded a net inflow of $3.3 billion, decreasing by $586 million compared to the same month of the previous year.

“In addition to a sharp contraction in foreign trade deficit in August, the continuing slowdown in direct investment’s yield transfers also played a role in the decrease in the current account gap. Although tourism income made a seasonal contribution, we saw weaker-than-expected tourism income,” said Halk Investment Research Director Banu Kıvcı Tokalı, as quoted by Reuters. 

She noted the company has lowered its year-end forecasts from $40 billion to 38 billion. 

The government revised its year-end expectation from $46 billion to $36.7 billion in the latest medium-term economic program.