Turkey: Current account deficit surges in 2010
February 11, 2011
In December, the current account incurred a deficit of USD 7.5 billion. The result overshot market analysts' expectations of a USD 7.0 billion deficit and exceeded the USD 6.1 billion deficit recorded in November. As a result, the full-year current account deficit widened markedly to a record USD 48.6 billion in 2010 (6.2% of GDP), more than triple the USD 14.0 billion deficit recorded in 2009 (2.3% of GDP). The rapid deterioration in the external account reflects an increasing imbalance between domestic demand and GDP growth, which has been driven by surging imports. The buoyant pace of import growth is raising concerns among Turkish monetary authorities, who have implemented a new policy mix aimed at curbing short-term capital inflows and cooling domestic credit growth. That said, imports outpaced exports in December, rising 38.5% over the same month the year before, while exports increased 16.1% year-on-year. As a result, the trade deficit expanded to USD 7.2 billion in December.