Turkish current account returns to deficit in Dec: poll

Turkey’s current account is expected to go back into deficit in December after four months of surpluses, a Reuters poll showed on Monday, as the economy takes a hit from falling tourism revenues.

Economists expect Turkey to record a current account deficit of $1.5 billion in December and of $27.7 billion for 2018 as a whole, the poll showed.

Along with persistent double-digit inflation, Turkey’s long history of such deficits has been a major concern for investors. It means the economy relies on speculative foreign inflows to finance the shortfall.

The lira’s near-30 percent depreciation in 2018 had weakened domestic demand and driven up import costs, a major factor in the current account balance, leading to four consecutive months of surpluses.

The expected $1.5 billion current account deficit in December - the median estimate of 17 economists in the poll - compared with a $986 million surplus a month earlier.

“It does not amount to a change in the trend. We will produce a deficit due to the low tourism revenues but the current account deficit will continue to fall,” said economist Haluk Burumcekci of Burumcekci Research and Consulting.

He said he expected a deficit of $22 billion in 2019, but there were downside risks to this forecast, with falling energy costs and low growth potentially having a positive impact. (RTRS)