Turkey’s current account deficit seen $265 mln in June

12-month CA expected to show a surplus for the first time since 2002

ISTANBUL, Aug 8, (RTRS): Turkey’s current account is expected to have recorded a relatively small deficit of $265 million in June, a Reuters poll showed on Thursday, as the 12-month current account is expected to show a surplus for the first time since 2002.

Turkey’s current account, which climbed to $58 billion in May 2018, has dropped dramatically in the wake of a currency crisis that saw the lira lose nearly 30% of its value against the dollar last year.

The large deficit had been a key concern for investors because it leaves the economy reliant on speculative inflow to finance the shortfall.

Economic activity slowed substantially in the wake of the crisis, while the cost of imports surged, which reduced the current account deficit.

With a big boost from tourism income in the peak summer months, the current account is expected to a show a surplus for the first time under President Tayyip Erdogan’s 16-year rule.

Median estimate in the Reuters poll of 12 economists stood at $265 million, with forecasts ranging between a deficit of $700 million and breaking even.

Haluk Burumcekci, owner of Burumcekci Consulting, said high tourism revenues and a low trade deficit helped. “It seems like the 12-month current account will turn to a surplus. That will be the first time since November 2002,” he said.

“The surplus will increase in July. There is a possibility that we will end the year with a surplus but it depends on growth and economic recovery.”

According to a Reuters calculation, the 12-month surplus will stand around $350 million in June, taking into account the median deficit estimate.

The median estimate for current account deficit for end-2019 stood at $8.25 billion. Estimates ranged between a deficit of $11.5 billion and a surplus of $2 billion. Eight economist participated in the 2019 poll.

The median estimate stood at $7.1 billion in the previous Reuters poll. The annual deficit narrowed to $27.8 billion last year from $47.35 billion in 2017.

Turkey’s foreign trade deficit narrowed 42.5% year-on-year in June to $3.18 billion, official data

shows.

Turkey’s central bank is expected to announce the June current account data at 0700 GMT on Aug. 9.

Meanwhile, the Turkish central

bank’s net international reserves stood at 179.442 billion lira ($32.15billion) as of Aug 2, data showed on Thursday. They stood at 184.021 billion lira a week earlier. The exchange rate used by

Reuters on Thursday was 5.5815 compared to5.6991 used a week earlier.Note: The figures are released every week on the central bank balance sheet as per a letter of intent with the International Monetary

Fund dated 18 January 2002. The figures are released in Turkish liras and are converted by Reuters to US dollars using the central bank’s official exchange rate from the previous day.