Turkey narrows current account deficit further in February

ANKARA

REUTERS Photo

Turkey’s current account deficit narrowed to $3.19 billion in February from $4.83 billion a month earlier, indicating a recovery in the Achilles’ heel of the country’s economy.

As the February deficit was in parallel with market expectations, which had been around $3 billion, the two-month gap appears to have contacted by $2.8 billion compared to the same period last year, totaling $8.12 billion, the Central Bank announced on April 11.

“This decrease is mainly accounted for by a decline of $2.536 billion in the foreign trade deficit, which recorded $8.822 billion, as well as an increase of $447 million in the services surplus, reaching $1.770 billion in the first two months,” the Bank said in a statement released to announce payment balances.

The government estimates that the current account deficit will retreat to $55.5 billion in 2014, hoping that its ratio to GDP will be 6.4 percent.

Strong export performance fuelled by the weak lira, as well the improving mood in Turkey’s top market, the European Union, has been the main driver of the recovery in the soft underbelly of the country’s economy.

The government also places high hopes on macro-prudential measures that limit installment payments and individual loans with the aim of boosting saving, even while jeopardizing domestic market spending.

Turkey’s current account deficit took a sharp turn for the worse in 2013, soaring to $65 billion, coming way above the government’s target in its Medium Term Program, which was $58.8 billion.