Turkey's current account gap significantly drops in January

Turkey's current account deficit fell 88.4 percent in the first month of this year, the Central Bank of the Republic of Turkey (CBRT) announced yesterday.

The current account posted an $813 million deficit, indicating a decrease of $6.22 billion compared to January of the previous year, bringing the 12-month rolling deficit to $21.59 billion, the lowest level of 105 months, according to Anadolu Agency (AA).

An AA survey on Friday showed that economists had forecast a deficit of $800 million. Estimates from a group of 16 economists for the first month of 2019 ranged from $600 million to $1.2 billion. The central bank said the development in the current account is mainly attributable to a fall in the foreign trade deficit and rise in net inflows in the services item.

"The gold- and energy-excluded current account indicated a $2.9 billion surplus, in contrast to a $1.5 billion deficit observed in the same month of 2018," the bank said. Official figures said the travel item under services saw a net inflow of some $1 billion in January, up $127 million on a yearly basis.

Evaluating the data, AA finance analyst and economist Haluk Bürümcekçi said the last 12-month current account deficit showed a significant decline.

Bürümcekçi said that February foreign trade leading indicators indicate a much lower deficit compared to last year, pointing out that the last 12-month current account deficit may fall below $18 billion.

"The Trade Ministry announces unofficial export and import data for the previous month on the first business day of the month. According to the data in question, in February, exports amounted to $13.6 billion and imports amounted to $15.8 billion. Thus, the foreign trade deficit was realized as $2.2 billion. This means that the foreign trade deficit (last February $5.8 billion deficit) will show a significant decrease annually," he said.

Last year, the current account balance posted a deficit of around $27.6 billion, improving from a nearly $47.5 billion deficit in 2017. The figure was the lowest since 2009, while Turkey's highest annual current account deficit over the last decade was seen in 2011, with $74.4 billion.

The country's new economic program, announced in September 2018, targets a current-account-deficit-to-GDP ratio of 3.3 percent this year. An AA survey also showed the end-2019 current account balance is expected to show a deficit of $19.5 billion, with estimates ranging from $12 billion to $28 billion.