Turkey: External position continues to deteriorate in April due to Covid-19
June 12, 2020
Turkey’s current account deficit widened markedly from USD 0.5 billion in April 2019 to USD 5.1 billion in April 2020 (March 2020: USD -4.8 billion). The print marked the fifth consecutive monthly shortfall and the largest deficit in just under two years. Consequently, the 12-month rolling current account balance swung from a USD 1.5 billion surplus in March to a deficit of USD 3.3 billion in April.
The widening of the current account deficit compared to the same period a year earlier came on the back of a services trade deficit—due to far-reaching global containment measures weighing heavily on the tourism sector—and a merchandise trade shortfall. Merchandise exports nosedived 42.2% in April (March: -18.3% year-on-year), the strongest contraction since at least 1993. Imports fell 25.0% (March: +3.3% yoy).
On the financial front, there was a net outflow of USD 2.3 billion, down from the USD 5.6 billion outflow in the same month a year prior and the USD 7.7 billion outflow recorded in March. April’s outflow came on the back large-scale portfolio outflows as non-residents reduced their holdings of Turkish equities, and private-sector debt repayments. Moreover, the country’s already low international reserves decreased by USD 8.6 billion in the month.
Author: Jan Lammersen, Economist