Turkey: Current account posts larger deficit in January
The current account posted a USD 9.8 billion deficit in January, deteriorating from the USD 5.9 billion deficit posted in December (January 2022: USD 6.9 billion deficit). Meanwhile, in the 12 months leading up to January, the current account recorded a USD 51.7 billion deficit, compared to the USD 48.7 billion deficit posted in December.
The merchandise trade balance worsened from the previous month, recording a USD 12.4 billion shortfall in January (December 2022: USD 8.1 billion deficit). Merchandise exports climbed 9.8% year on year in January, following December’s 2.1% increase. Meanwhile, merchandise imports shot up 21.5% in annual terms in January (December 2022: +12.8% yoy).
Pressures on the current account will persist this year. The global economic slowdown, coupled with uncertainties in foreign and monetary policy, will deter capital flows. Additionally, a weaker lira will take a toll on the import bill. That said, easing commodity prices will provide some relief.
Muhammet Mercan, chief economist at ING, commented on the outlook:
“The latest indicators hint at further widening in February with a continuing increase in the foreign trade deficit. Recently, we also saw a tightening in regulations that govern gold imports and the domestic transactions of gold in response to the recent surge in gold imports. Going forward, the impact of these regulations and likely import demand from reconstruction efforts in the earthquake region will be key for the current account outlook.”