The current account deficit hit $3.2 billion in February, a sharp increase from $2 billion in January, according to the Central Bank of the Republic of Turkey's (CBRT) statement released on Friday. However, when compared to the same time last year, February's deficit narrowed by $146 million. Moreover, the 12 month average deficit dropped to $42.8 billion from $42.9 billion. Speaking in Ankara on Thursday, CBRT Governor Erdem Başçı said he expected recent improvements in the country's current account balance to slow due to rising automotive imports. But Başçı forecasts the current account deficit improvement will resume after March as a result of falling oil prices.
Ziraat Securities economist Bora Tamer Yılmaz said the narrowing trend for the deficit would start again shortly. "We are seeing some volatility due to the gold trade and increased auto demand locally. That will not hurt the current account deficit substantially, and probably the balance will resume its improving trend in the summer months." Gold exports were a factor in the change, as net gold exports were $1.505 million - increasing by $932 million compared with the same month of the previous year.
Overall, exports declined by 13.4 percent to $11.23 billion in March, as the low value of the euro reduced the value of sales in Europe, Turkey's largest export market. "Not just by falling energy prices, the general decline in the commodity-complex as well as producer price deflation around the world is helping Turkey's import bill," Yılmaz said.
The year-on-year decrease in the current account deficit is mainly attributable to a $346 million decrease in the foreign trade deficit, which stood at $3.143 million, and a $38 million increase in the services surplus, which reached $724 million. Contrary to this, the improvement in the current account deficit was partially offset by a $238 million increase in the primary income deficit, which reached $853 million. The U.S Dollar exceeded 2.64 against the Turkish Lira and neared its record of 2.6488 on Friday, following strong signals from the U.S. economy and global strengthening in the U.S. Dollar against other currencies. The parity rate started the day from 2.62 and reached 2.6415 around mid-Friday. Euro-U.S. Dollar parity also exceeded 99.6 and reached a three week high level.