The Turkish Central Bank recorded a USD 151 million current account surplus May 2019, compared with the deficit of USD 6,172 million for the same month of the previous year.
The Central Bank showed exports as USD 16,916 million and imports at USD 17,622 million in May 2019, giving a trade deficit of USD 706 million, an improvement of USD 5,853 million on the trade deficit of USD 6,559 million of the same month of the previous year. Turkey’s current account deficit stood at USD 27,263 million for the year 2018, compared to USD 47,347 million for the previous year.
With regards items of the current account, the Central Bank’s analysis was as follows :
“This development in the current account is mainly attributable to USD 5,853 million decrease in the goods deficit recording net outflow of USD 706 million, as well as USD 594 million increase in services inflow to USD 2,303 million. Gold and energy excluded current account indicated USD 3,469 million surplus, in contrast to USD 1,204 million deficit observed in the same month of the previous year. Travel item under services recorded a net inflow of USD 1,846 million, increasing by USD 257 million compared to the same month of the previous year. Investment income under primary income item indicated a net outflow of USD 1,299 million increasing by USD 194 million in comparison to the same period the previous year. Secondary income recorded net outflow of USD 27 million decreasing by USD 104 million in comparison to the same month of the previous year.”
With regards the related Financial Account, the Central Bank’s analysis was as follows :
“Direct investment recorded a net inflow USD 204 million decreasing by USD 51 million compared to the same month of the previous year. Portfolio investment recorded a net outflow of USD 456 million. As regards to sub-items through liabilities, non-residents’ equity securities transactions and government domestic debt securities transactions recorded net sales of USD 138 million and USD 369 million, respectively. Regarding the bond issues in international capital markets, banks realized net repayments of USD 52 million. Other investment recorded a net inflow of USD 1,511 million. Under other investment, banks’ currency and deposits within their foreign correspondent banks and non-resident banks’ deposits held within domestic banks decreased by USD 3,989 million and USD 1,797 million, on the net basis. Regarding the loans provided from abroad, banks, General Government and other sectors realized net repayments of USD 616 million, USD 126 million and USD 524 million, respectively. Official reserves recorded net inflow of USD 3,008 million.”
The lower current account deficit in May 2019 continues to reflect the dramatic fall in imports following the currency crisis in the Summer of 2018 and the deepening economic crisis. In the short-term, as imports continue to remain depressed and exports remain relatively strong despite falls in investment, stocks, imported material input, and rising costs of production, the current account deficit is likely to remain minimal. However, in the medium to long-term, the deepening economic crisis is likely to depress economic activity and adversely affect the country’s balance of payments.
The current account figures over the twelve months up to and including May 2019 are given below. We can see that the 12 month rolling deficit has gradually fallen from USD 57,148 million in June 2018 to USD 2,370 million in May 2019.
USD in millions
Month Monthly balance 12 month rolling figure
June 2018 (3,019) (57,148)
July 2018 (2,217) (54,675)
August 2018 2,017 (51,754)
September 2018 1,857 (45,473)
October 2018 2,618 (39,016)
November 2018 1,035 (33,494)
December 2018 (1,519) (27,263)
January 2019 (633) (20,891)
February 2019 (739) (17,123)
March 2019 (620) (12,999)
April 2019 (1,301) (8,693)
May 2019 151 (2,370)