Turkey posts record current account deficit

Turkey posts record current account deficit

ISTANBUL - Hürriyet Daily News
Turkey posts record current account deficit

This photo shows a gas station employee pumping gas at a Turkish gas station yesterday. More than 50 percent of Turkey’s current account deficit is due to the country’s dependence on foreign fuel resources such as oil and gas. DAILY NEWS photo, Emrah GÜREL

Turkey’s 2011 current account deficit increased by a substantial 65.3 percent from 2010 reaching $77.8 billion, an approximately $30.5 billion increase from the $46.6 billion last year . Meanwhile, December’s current account deficit registered at roughly $6.6 billion.

The main reason behind the substantial current account gap was the large increase in the foreign trade deficit, a $33 million increase to $89.4 million, according to the central bank data.

“The current account deficit is still close to 10 percent of gross domestic product (GDP) […] but with the expected slowdown in the economy in 2012, we expect to see a slight narrowing in the deficit,” said Oyak Investment’s economists Mehmet Besimoğlu and Gülay Girgin in a written note. They predict the current account deficit to narrow to $55 billion, roughly 7.5 percent of GDP in 2012.

According to central bank data, there was also a $567 million year on year increase in the exodus of foreign direct investment and portfolio investments from Turkey.

While Turkey registered a $29 billion deficit in trade with the EU countries, it witnessed a $6 billion surplus with Islamic trading partners, up 15 percent from 2010. Its exports to Islamic countries saw a 41.5 percent rise. Turkey exported the most to Iraq, followed by the United Arab Emirates, Iran, Saudi Arabia, Egypt and Azerbaijan, according to the Anatolian news agency. Turkey exported $37.3 billion and imported $31.4 billion from these countries in 2011.

$12.4 bln in unknown inflow

Another interesting point is the $12.4 billion inflow of money without a specific source. In 2010 this amount, registered under the net errors and omissions heading, was $2.7 billion, so it has increased five-fold in one year.

Marmara University’s academic Erhan Aslanoğlu told broadcaster NTV’s website that there could be several reasons behind the mysterious inflow. Among the possible factors are possible mistakes in the calculation of tourism inflows or shuttle trade, which are usually written on an assumption, with citizens cashing in money they have been hoarding when there are increases in the exchange rate. The inflow could also be down to companies making their trade payments via overseas partners and making mistakes in transcription, which Aslanoğlu says
is unlikely.