The Turkish Central Bank recorded a USD 548 million current account deficit in June 2019, compared with the deficit of USD 3,019 million for the same month of the previous year.
The Central Bank showed exports as USD 11,874 million and imports at USD 14,475 million in June 2019, giving a trade deficit of USD 2,601 million, an improvement of USD 1,873 million on the trade deficit of USD 4,424 million of the same month of the previous year.
Turkey’s current account deficit for the first half of 2019 is USD 3,259 million. The current account deficit stood at USD 27,252 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 1,823 million decrease in the goods deficit recording net outflow of USD 2,601 million, as well as USD 754 million increase in services surplus to USD 3,166 million. Gold and energy excluded current account surplus recorded USD 2,284 million indicating an increase of USD 1,693 million compared to June of the previous year. Travel item under services recorded a net inflow of USD 2,527 million, increasing by USD 646 million compared to the same month of the previous year. Investment income under primary income item indicated a net outflow of USD 1,064 million increasing by USD 102 million in comparison to the same period the previous year. Secondary income recorded net inflow of USD 78 million increasing by USD 33 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 581 million decreasing by USD 471 million compared to the same month of the previous year. Portfolio investment recorded a net outflow of USD 2,098 million. As regards to sub-items through liabilities, non-residents’ equity securities transactions and government domestic debt securities transactions recorded net purchases of USD 192 million and USD 130 million, respectively. Regarding the bond issues in international capital markets, banks and other sectors realized net repayments of USD 1,322 million and USD 1,249 million, respectively. Other investment recorded a net inflow of USD 2,368 million. Under other investment, banks’ currency and deposits within their foreign correspondent banks decreased by USD 1,564 million and non-resident banks’ deposits held within domestic banks increased by USD 270 million, on the net basis. Regarding the loans provided from abroad, banks, General Government and other sectors realized net repayments of USD 1,043 million, USD 173 million and USD 1,188 million, respectively. Official reserves recorded net outflow of USD 2,476 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 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 thirteen months up to and including June 2019 are given below. We can see that the 12 month rolling balance has gradually fallen from a deficit of USD 57,148 million in June 2018 to a surplus of USD 538 million in June 2019.
USD in millions
Month Monthly balance 12 month rolling figure
June 2018 (3,019) (57,143)
July 2018 (2,215) (54,668)
August 2018 2,018 (51,746)
September 2018 1,858 (45,464)
October 2018 2,619 (39,006)
November 2018 1,036 (33,483)
December 2018 (1,519) (27,252)
January 2019 (614) (20,863)
February 2019 (736) (17,093)
March 2019 (619) (12,969)
April 2019 (1,059) (8,422)
May 2019 317 (1,933)
June 2019 (548) 538