Türkiye's current account balance recorded another monthly surplus, posting nearly $1.9 billion (TL 66.27 billion) surplus in October and bringing the 12-month deficit further down, official data from the country's central bank showed on Thursday.
The balance posted a larger-than-expected surplus of $1.88 billion in October, according to the data shared by the Central Bank of the Republic of Türkiye (CBRT).
A Reuters poll from last week expected the current account to record a surplus of $1.32 billion in October, with forecasts by 11 economists polled ranging from $900 million to $1.9 billion surplus.
The economists in the Bloomberg poll similarly estimated the balance would register a surplus of around $1.3 billion. The current account posted a surplus of $3 billion in September.
Gold and energy excluded current account balance indicated a net surplus of $7.16 billion, the bank noted.
In the month, the goods deficit recorded $3.5 billion, while services saw a net inflow of $6.45 billion, the CBRT said. Travel items, under services, recorded a net inflow of $5.1 billion.
Primary income recorded a net outflow of $1.05 billion and secondary income recorded a net inflow of $20 million. Direct investment recorded a net outflow of $204 million.
When looked at on an annualized basis, the current account balance showed a deficit of $7.7 billion, the central bank data revealed.
In September, the annualized current account balance had a deficit of $9.5 billion.
The central bank, pledging to fight inflation, has gradually hiked its policy interest rate to 50% from 8.5% since June last year.
Türkiye also introduced measures to cap strong domestic demand, one of the main reasons for higher imports, and to boost investments and exports to improve the current account balance.
Economists expect the current account deficit to continue to improve this year as monetary and fiscal policy remains tight.
Citi in a recent note said the current account balance will register a surplus of about in October driven by a surplus in the services balance.
"Developments to date suggest to us that the current account deficit is on track to narrow this year to about 0.6% of GDP (gross domestic product) from about 3.6% in 2023 due mainly to a slowdown in activity, a normalization in gold imports and a softer energy bill."
The foreign trade deficit, which constitutes a major part of the current account balance, declined 10.5% and stood at $5.91 billion in October. The January-October deficit fell 30.1% to $65.85 billion.
Last year, the current account deficit narrowed to $45.2 billion from $48.8 billion in 2022.
The median of the current account deficit forecasts for 2024 in a Reuters poll was $10.25 billion, with estimates ranging from $5 billion to $11 billion of deficit.
In the government's medium-term program, updated every September, the 2024 current account deficit is estimated to be $22 billion but government officials have said the current account deficit will narrow further.
Trade Minister Ömer Bolat said in a post on X on Thursday that the current account "has given a surplus for the first time in five years for five consecutive months."
"The current account deficit has decreased by $32.8 billion to $3.3 billion in the first 10 months of 2024," he noted.
"Positive trend in current account balance continues," Vice President Cevdet Yılmaz said.
"Improvement in the current account balance contributes to the disinflation process by strengthening economic and financial stability," he added.
Reiterating that the annualized current account gap has narrowed to $7.7 billion as of October, Yılmaz said that "the balance of services supports the improvement in the foreign trade deficit."
"While the strong outlook in external financing is maintained, our reserves are also increasing," he said.
"The positive results obtained from macroeconomic indicators reveal the effectiveness of our economic program," he further said.
"With the impact of the rebalancing policies and reforms we will implement within the scope of the Medium Term Program (MTP), we expect the current account deficit to be around 1% of national income by the end of 2024," Yılmaz noted.
