The Turkish Central Bank recorded the current account deficit for February 2019 as USD 718 million, a fall of 84% compared with the deficit of USD 4,494 million for the same month of the previous year.
The Central Bank showed exports as USD 13,973 million and imports at USD 15,047 million in February 2019, giving a trade deficit of USD 1,074 million, an improvement of USD 3,690 million on the trade deficit of USD 4,764 million of the same month of the previous year. Turkey’s current account deficit stood at USD 27,813 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 3,690 million decrease in the goods deficit recording net outflow of USD 1,074 million, USD 57 million increase in net inflows of services item recording USD 894 million and USD 68 million decrease in primary income deficit indicating USD 495 million. Gold and energy excluded current account indicated USD 2,748 million surplus, in contrast to USD 449 million deficit observed in the same month of the previous year. Travel item under services recorded a net inflow of USD 815 million, increasing by USD 59 million compared to the same month of the previous year. Investment income under primary income item indicated a net outflow of USD 400 million decreasing by USD 86 million in comparison to the same month of the previous year. Secondary income recorded net outflow of USD 43 million increasing by USD 39 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 486 million, in contrast to USD 271 million outflow observed in the same month of the previous year. Portfolio investment recorded a net inflow of USD 1,786 million. As regards to sub-items through liabilities, non-residents’ equity securities transactions recorded net purchases of USD 136 million and government domestic debt securities transactions recorded net sales of USD 492 million. Regarding the bond issues in international capital markets; banks, General Government and other sectors realized net borrowings of USD 92 million, USD 2,000 million and USD 500 million, respectively. Other investment recorded a net outflow of USD 128 million. Under other investment, banks’ currency and deposits within their foreign correspondent banks increased by USD 246 million and non-resident banks’ deposits held within domestic banks decreased by USD 711 million, on the net basis. Regarding the loans provided from abroad, General Government realized net borrowings of USD 48 million, while banks and other sectors realized net repayments of USD 206 million and USD 677 million, respectively. Official reserves recorded net inflow of USD 2,823 million.”
The low current account deficit in February 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 nine months up to and including February 2019 are given below. We can see that the 12 month rolling deficit has gradually fallen from USD 57,150 million in June 2018 to USD 17,004 million in February 2019.
USD in millions
Month Monthly balance 12 month rolling figure
June 2018 (3,041) (57,150)
July 2018 (2,217) (54,677)
August 2018 2,001 (51,772)
September 2018 1,870 (45,478)
October 2018 2,618 (39,021)
November 2018 1,056 (33,478)
December 2018 (1,500) (27,228)
January 2019 (589) (20,820)
February 2019 (718) (17,004)