Turkey: Current account records small deficit in January
March 11, 2019
The current account balance recorded a USD 0.8 billion deficit in January, smaller than December’s revised USD 1.5 billion deficit (previously reported: USD 1.4 billion deficit) and down markedly from the USD 7.0 billion deficit recorded in the same month a year prior. The current account position has strengthened markedly since the middle of last year due to tepid domestic demand and a weaker currency.
January’s deficit was underpinned by a trade deficit in goods, which more than offset a trade surplus in services thanks to a solid tourism sector. However, the goods deficit was down markedly year-on-year, as the weak labor market, pessimistic consumer sentiment and general limp economic activity hampered import demand.
On the financing front, there were USD 6.1 billion of net inflows in January, thanks largely due to external borrowing by banks and the government, and non-residents’ purchases in the stock market. This enabled the Central Bank to accumulate USD 3.5 billion in foreign reserves, and continue rebuilding external buffers which were depleted over the course of 2018.
Author: Oliver Reynolds, Economist