Turkey: Current account deficit continues to widen
June 13, 2011
In April, the current account incurred a deficit of USD 7.7 billion. The result was broadly in line with market expectations, and was down from the revised USD 9.7 billion deficit recorded in March. However, the current account deficit over the last 12 months continued to widen, reaching USD 63.7 billion in April, up from a USD 48.4 billion deficit recorded in the full year 2010 (6.6% of GDP). The Central Bank stated that the deterioration in the current account reflects strong domestic demand and higher energy prices, as Turkey imports about 95% of its total energy needs. The rapid pace of import growth continues to raise concerns among Turkish monetary authorities, who wish to rebalance GDP expansion and increase the contribution from net exports to overall growth via measures designed to slow domestic demand. Despite authorities' efforts, imports remain buoyant, rising 40.2% over April 2010 in USD terms (March: +44.1% year-on-year), while exports accelerated, adding 26.4% over the same period the previous year (March: +19.4% yoy). As a result, the trade deficit increased to a record high of USD 87.2 billion in the 12-month period to April 2011.