Turkey's current deficit lowers amid rising concerns on second-half trade
Turkey’s current account deficit became $3.43 billion in May, according the Central Bank data. DAILY NEWS PhotoThe Turkish current account deficit continued to decrease in May, raising the total five-month contraction to over 38 percent, but deteriorating export conditions cast doubts on the sustainability of the recovery in the country’s Achilles’s heel.
According to data announced by the Central Bank on July 11, Turkey’s current account deficit became $3.43 billion in May, coming drastically below forecasts that were wavering around $4 billion.
The total deficit for the January-May period was realized at $19.8 billion, indicating a decrease of $12.4 million compared to same period of the previous year.
The May deficit marked a 55 percent decrease from the same month last year, while that total five-month shrinkage became 38.5 percent
The main driver for this remarkable decline in the gap is diminishing foreign trade deficit and increasing revenues from service sector, according to the Central Bank.
“This decrease is mainly accounted for from foreign trade deficit in the balance of payments table, which decreased by $10.8 billion, compared to the same five months in 2013 recording $22.7 billion. The service sector, which indicated a surplus of $6.4 billion increasing by $677 million, has also contributed to the drop,” the bank said in a statement released to announce the figures.
The rising mood in Turkey’s main trade partner Europe, along with a weaker Turkish Lira that increases demand for Turkish goods and the rebalanced gold trade have animated Turkish exports during the first five months of the year.
According to recently released data based on the month of May, the monthly foreign trade deficit has become $7.1 billion with a 28.7 percent decline from last year.
However, increasing geopolitical risks, especially from violence and political turmoil that threatens business security in Iraq, raises fears of whether the country will be able to maintain its robust export performance in the second half of the year.
Turkey’s economic growth has mainly relied on foreign trade amid the weakness in the domestic market, which was fueled by limitations on credit card spending and individual loans, raising the stakes in the case of deteriorating export performance.