The Turkish Central Bank recorded the current account deficit for March 2019 as USD 589 million, a fall of 87.6% compared with the deficit of USD 4,734 million for the same month of the previous year.
The Central Bank showed exports as USD 16,400 million and imports at USD 17,316 million in March 2019, giving a trade deficit of USD 916 million, an improvement of USD 3,725 million on the trade deficit of USD 4,641 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 3,725 million decrease in the goods deficit recording net outflow of USD 916 million. Gold and energy excluded current account indicated USD 3,477 million surplus, in contrast to USD 573 million deficit observed in the same month of the previous year. Services item realized net inflow of USD 1,298 million increasing by USD 113 million compared to March 2018. Specifically, travel item under services recorded net inflow of USD 1,043 million, increasing by USD 55 million in the same month. Investment income under primary income item indicated a net outflow of USD 1,076 million decreasing by USD 131 million in comparison to the same month the previous year. Additionally, secondary income recorded net inflow of USD 199 million increasing by USD 195 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 965 million decreasing by USD 120 million compared to the same month of the previous year. Portfolio investment recorded a net inflow of USD 1,353 million. Regarding the bond issues in international capital markets, even though General Government realized net repayment of USD 500 million, banks and other sectors realized net borrowing of USD 1,702 and USD 1,202 million, respectively. Non-residents’ equity securities transactions and government domestic debt securities transactions recorded net sales of USD 554 million and USD 863 million, respectively. Other investment recorded a net outflow of USD 3,153 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 4,722 and USD 303 million, respectively, on net basis. Besides, for the deposit accounts of residents (excluding banks) held in abroad, Bank for International Settlements (BIS) statistics were finalized for the fourth quarter of 2018 and reflected in the related item as an outflow of USD 3,075 million. Regarding the loans provided from abroad, other sectors realized net borrowings of USD 789 million, while banks and General Government realized net repayments of USD 709 million and USD 91 million, respectively. Official reserves recorded net outflow of USD 5,728 million.”
The low current account deficit in March 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 ten months up to and including March 2019 are given below. We can see that the 12 month rolling deficit has gradually fallen from USD 57,098 million in June 2018 to USD 12,829 million in March 2019.
USD in millions
Month Monthly balance 12 month rolling figure
June 2018 (3,010) (57,099)
July 2018 (2,208) (54,617)
August 2018 2,029 (51,684)
September 2018 1,874 (45,386)
October 2018 2,639 (38,908)
November 2018 1,061 (33,360)
December 2018 (1,505) (27,115)
January 2019 (622) (20,740)
February 2019 (733) (16,974)
March 2019 (589) (12,829)