Turkey: Current account deficit falls in February
The current account posted a USD 8.8 billion deficit in February, improving from the USD 10.0 billion deficit in January (February 2022: USD 5.3 billion deficit) but slightly above market expectations. Meanwhile, the 12-month trailing current account deficit worsened, coming in at USD 55.4 billion in February (January: USD 51.9 billion deficit).
The merchandise trade balance improved from the previous month, recording a USD 10.4 billion shortfall in February (January 2023: USD 12.5 billion deficit). Merchandise exports fell 6.6% on an annual basis in February (January: +9.8% year on year). The figure marked the first decline since January 2021. Meanwhile, merchandise imports rose 10.7% over the same month last year in February (January: +21.5% yoy), marking the weakest reading since February 2021.
Current account pressures will persist throughout the year. The import bill is set to remain elevated due to the weakness of the lira and recent OPEC+ cuts. Moreover, exports will remain muted, dented by a challenging international backdrop, which, coupled with uncertainties in foreign and monetary policy, will hamper capital inflows.
Muhammet Mercan, chief economist at ING, commented:
“Overall, […] the latest indicators hint at further widening in March with a continuing increase in the foreign trade deficit driven by gold trade and core imports. However, gold imports almost halved last month, the lowest since July 2022, likely due to a tightening in regulations that govern gold trade and the domestic transactions of gold.”