Turkey’s current account gap narrows over oil plunge

Turkey’s current account gap narrows over oil plunge

Turkey’s current account gap narrows over oil plunge

AFP photo

Turkey’s current account deficit stood lower than expected at $1.79 billion for February, a fall of more than $1.5 billion year-on-year, the Central Bank said on April 11. 

The 12-month rolling deficit fell to $30.5 billion, down from $42.8 billion in February last year, as lower oil prices continued to reduce Turkey’s energy imports. This figure was the lowest since August 2010, according to official data. 

“This development in the current account is mainly attributable to a $1.47 billion decrease in the deficit in goods items, recorded at $1.96 billion, and $99 million decrease in the primary income deficit, recorded at $717 million. Besides, services item indicated a net surplus of $495 million, decreasing by $228 million,” said the bank. 

Official reserves recorded a net increase of $646 million, it added. 

Analysts expect political tensions with Moscow and domestic security risks to hit tourism revenues, adding around $5 billion to the deficit this year. 

“We saw the recovering trend in the current account deficit continue in the first months of 2016 thanks to the decreasing trend in energy prices, the positive contribution of the loss in the Turkish Lira over competitiveness level and some rebound in European economies. Although the lowering energy prices are expected to make a positive contribution to Turkey’s current account gap, potential losses in the tourism revenue will negatively affect the figure,” said ING Bank’s chief economist Muhammet Mercan, as quoted by Reuters. 

BCG Partners chief economist Özgür Altuğ told Reuters that the suitcase trade decreased by 26 percent in the first two months of the year compared to the same period of 2015 and tourism revenue dropped by 16 percent amid continuing problems with Russia.