Turkey: Current account deficit widens further in May
July 11, 2011
In May, the current account balance incurred a deficit of USD 7.8 billion. The result was broadly in line with market expectations and was up from the revised USD 7.6 billion deficit recorded in April. As a result, the current account deficit over the last 12 months continued to widen, reaching USD 68.2 billion in May (approximately 8.5% of GDP). Imports remain buoyant despite authorities' efforts to rebalance GDP expansion and increase the contribution from net exports to overall growth. Imports rose 42.6% over May 2010 in USD terms (April: +40.2% year-on-year), while exports decelerated sharply, adding only 11.7% over the same period the previous year (April: +26.5% yoy). As a result, the trade deficit increased to a record high of USD 92.4 billion in the 12-month period to May 2011. In an attempt to narrow the expanding deficit, Economy Minister Zafer Caglayan announced that the government will provide incentives to key manufacturing sectors in order to foster use of Turkish material in their production processes and reduce dependence on imported raw materials.