Turkey: Current account deficit moderates in January as lira falls to all-time low
March 12, 2014
The current account balance recorded a USD 4.9 billion deficit in January. The figure represents a sizeable improvement over both the USD 5.8 billion deficit recorded in the same month last year and the USD 5.3 billion shortfall the market had expected. The 12-month trailing current account deficit narrowed from USD 64.9 billion in December to USD 64.0 billion January (equivalent to approximately 7.5% of GDP). Exports expanded 8.5% in USD terms over the same month last year, which was above the 4.0% increase recorded in December and marked the fastest acceleration in a year. Imports slowed to a 2.3% increase in January, which was well below December's 16.7% expansion. As a result of the slowdown in imports, the trade deficit was USD 5.2 billion in January, which marked an improvement over the USD 5.9 billion shortfall recorded in the same month last year. According to analysts, the improvement in the current account deficit mainly reflects that the lira continues to weaken, as it had done throughout 2013. Analysts expect the current account deficit to continue to narrow over the coming months due to the weaker lira and higher interest rates, which will dampen domestic demand. FocusEconomics Consensus Forecast panelists expect the current account deficit to reach 6.2% of GDP this year, which is up 0.3 percentage points from last month's estimate. For 2015, the panel sees the current account deficit remaining broadly stable at 6.1% of GDP.