Turkey: Current account deficit widens further amid strong domestic demand
The current account balance recorded a USD 4.8 billion deficit in March, widening from the USD 3.1 billion deficit recorded in March 2017. March’s figure was also below the revised USD 4.5 billion deficit (previously reported: USD 4.2 billion) recorded in February and below market expectations of a USD 4.1 billion deficit. Consequently, the 12-month trailing current account deficit widened to USD 55.4 billion in March from the revised 53.7 billion in February (previously reported: USD 53.5 billion), the largest deficit in four years.
The trade deficit in goods widened to USD 4.6 billion in March from USD 2.9 billion in March 2017, as buoyant domestic demand saw imports surge. Goods imports recorded a healthy 13.7% increase in annual terms in March, despite moderating from February’s robust 21.0% expansion (previously reported: +20.8% year-on-year), with net gold imports surging year-on-year. Total imports for the month stood at USD 20.7 billion. Annual growth in merchandise exports eased to 5.2% from 7.3% in February.
Meanwhile, the trade surplus in the services sector increased to USD 1.1 billion in April. The rise was driven by a net inflow of USD 988 million in the travel services sector, up substantially from the USD 749 million registered in March 2017.
March’s deficit was largely financed by official reserves, which shrank by USD 4.8 billion. March’s balance of payments figures raise further concerns about an overheating economy, with the lira depreciating following the publication of the figures.