The Turkish Central Bank recorded a USD 1,158 million current account surplus in July 2019, compared with a deficit of USD 2,178 million for the same month of the previous year.
The Central Bank showed exports as USD 16,046 million and imports at USD 18,570 million in July 2019, giving a trade deficit of USD 2,524 million, an improvement of USD 2,421 million on the trade deficit of USD 4,945 million of the same month of the previous year.
Turkey’s current account deficit for the first seven months of 2019 is USD 1,695 million, which compares with a deficit of USD 33,160 million for the same period of the previous year.
The current account deficit stood at USD 27,020 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 2,421 million decrease in the goods item recording net outflow of USD 2,524 million, as well as USD 959 million increase in services inflow to USD 4,277 million. Gold and energy excluded current account surplus recorded USD 4,585 million indicating an increase of USD 2,430 million compared to July of the previous year. Travel item under services recorded a net inflow of USD 3,297 million, increasing by USD 637 million compared to the same month of the previous year. Investment income under primary income item indicated a net outflow of USD 665 million increasing by USD 145 million in comparison to the same period the previous year. Secondary income recorded net inflow of USD 138 million increasing by USD 73 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 of USD 657 million decreasing by USD 66 million compared to the same month of the previous year. Portfolio investment recorded a net inflow of USD 97 million. As regards to sub-items through liabilities, non-residents’ equity securities transactions and government domestic debt securities transactions recorded net purchases of USD 88 million and USD 391 million, respectively. Regarding the bond issues in international capital markets, banks realized net repayments of USD 1,410 million and General Government realized new issue of USD 2,250 million. Other investment recorded a net inflow of USD 634 million. Under other investment, banks’ currency and deposits within their foreign correspondent banks and non-resident banks’ deposits held within domestic banks increased by USD 1,704 million and USD 1,619 million, on net basis. Regarding the loans provided from abroad, banks, General Government and other sectors realized net repayments of USD 417 million, USD 102 million and USD 43 million, respectively. Official reserves recorded net inflow of USD 3,156 million.”
The lower current account deficits over the last year continues to reflect the dramatic fall in imports following the currency crisis in the Summer of 2018 and the deepening economic crisis, rather than any improvement in the health of the Turkish economy. In the short-term, as imports continue to remain depressed, the current account will most likley remain in balance. There is however a risk that exports will come under pressure due to recession in export markets and lack of investment in Turkey, in which case a widening trade deficit may adversely effect the current account balance.