Turkey: Current account gap narrows in August
October 11, 2017
The current account balance recorded a USD 1.2 billion deficit in August, narrowing the gap from August 2016’s USD 1.4 billion shortfall. The result came in slightly below market expectations of a USD 1.8 billion current account deficit and was well below the USD 5.2 billion gap recorded in July. The 12-month trailing current account deficit narrowed marginally from a nearly two-year high of USD 37.1 billion in July to USD 37.0 billion in August.
The smaller deficit recorded in August reflected a large surplus in secondary income. The trade deficit in goods and services was largely unchanged from August 2016, with a larger gap in traded goods being offset by a wider surplus in the services sector. Merchandise exports were up 14.1% in annual terms in August (August 2016: +12.4% year-on-year) due to sustained demand from European trading partners and a weaker lira. Merchandise imports growth accelerated at an even faster pace (August 2017: +18.4% yoy; August 2016: +16.0% yoy), which caused the trade deficit of goods to widen to USD 4.3 billion in August. Conversely, the services surplus rose to USD 3.5 billion in August from USD 2.9 billion in August of last year.
The revival of the tourism sector continues to stand out as the economy’s brightest spot. Among exports of services, travel recorded a net inflow of USD 2.9 billion in August, which was above the USD 2.3 billion inflow recorded in the same month last year. Tourist arrivals have soared so far this year amid improved security conditions and following Russia’s removal of its travel ban last year.
Author: David Ampudia, Economist