Current account deficit at 10-year-low at $27.6 billion
current account deficit fell to a 10-year-low in 2018, the country’s central bank announced yesterday. Last year, the current account balance posted a deficit of $27.6 billion, improving from a nearly $47.5 billion deficit in 2017.
The current account deficit recorded gradual increases in the period of August to November with a series of measures the government took and the rebalancing of economic activity.
In 2018, the current account balance posted a surplus in four consequent months, reaching the highest point in October. Last year, the current account balance recorded a surplus in August, September, October and November, respectively, at $1.9 billion, $1.8 billion, $2.6 billion and
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$1.1 billion. The figure was the lowest since 2009, while the country’s highest annual current account deficit over the last decade was in 2011, at $74.4 billion.
On a monthly basis, the balance showed a $1.4 billion deficit in December, after a surplus of $986 million for four consecutive months.
In December, excluding gold and energy, the current account balance indicated a $2.5 billion surplus, versus $2.4 billion in the same month of 2017.
“This month, goods items had a net outflow of $1.68 billion, a decrease of $5.86 billion compared to the same month the previous year.
“Travel items under services recorded a net inflow of $898 million, increasing by $118 million compared to the same month of the previous year,” the bank said. According to the New Economic Program (NEP), presented in September of 2018, the ratio of the current account deficit to the gross domestic product (GDP) will gradually decrease as of next year and fall to 3.3 percent in 2019, 2.7 percent in 2020 and 2.6 percent in 2021.
According to an Anadolu Agency (AA) survey, Turkey’s end-2019 current account balance is expected to show a deficit of $19.8 billion, with expectations ranging from between $5 billion and $28 billion.
Commenting on expectations for current account data this year, Halk Investment Research Director Banu Kıvci Tokalı argued that the fall in current account data will continue in the first half of the year in accordance with developments in exchange rates and demand. Energy prices and a new program to support exports will also positively impact the current account balance and the deficit is likely to be $19 billion.
“The current levels of exchange rates, economic slowdown and the flow of oil prices will be decisive for the course of the current account balance. In addition, the Fed’s decision not to expedite monetary tightening policies is a positive signal as it might lead to an increase in the flow of funds into emerging markets,” Tokalı said, and pointed out the significance of trade wars, which have so far relatively inhibited the funding flow into emerging markets.