Turkey: Current account balance records another surplus in September
The current account balance recorded a USD 1.8 billion surplus in September, down marginally from August’s revised USD 1.9 billion surplus (previously reported: USD 2.6 billion surplus) but still significantly improved from the USD 4.4 billion deficit observed in the same month last year. After deteriorating in annual terms for a prolonged period due to government stimulus measures, the current account balance has improved markedly since June due to the weaker lira and softer domestic demand.
September’s figure was underpinned by a substantial reduction in the goods deficit, which narrowed year-on-year from USD 6.7 billion to USD 0.8 billion. In addition, the trade surplus in services broadened year-on-year from USD 3.1 billion to USD 3.5 billion, largely on greater tourism revenue.
On the financing front, there were USD 4.9 billion of net capital outflows in September, following a large USD 14.3 billion of net outflows in August. This was a result of net outflows of portfolio investment, and an increase in banks’ currency and deposits held abroad amid lingering lira weakness.
According to Muhammet Mercan, ING’s chief economist for Turkey:
“September data shows that outflows have lost momentum in comparison to August, becoming less of a market concern. However, the outlook will likely remain challenging given sizeable total external financing needs in the period ahead mostly due to private debt amortization. […] given the ongoing loss of momentum in the economy and a weaker Turkish lira, [the] trade balance is likely to recover, indicating we’ll see further improvement in the external deficit.”