Turkey’s current account surplus in 2019 was first in 18 years
Turkey achieved a higher-than-expected current account surplus of $1.674bn last year, its first since 2001, official data showed yesterday, but it may return to deficit this year as growth picks up after aggressive monetary easing. The deficit, which reached $58bn in May 2018, turned to surplus last year, after a currency crisis drove up import prices and hit domestic demand.
But after year-over-year growth returned in the third quarter of 2019, the current account started posting monthly deficits.
The monthly current account deficit widened sharply to $2.798bn in December, from $365mn a month earlier.
The full-year figure exceeded a forecast of a $1.18bn surplus in a Reuters poll.
The monthly deficit was below a forecast of $3.05bn. The central bank has slashed its policy rate by 1,275 basis points since July to promote economic growth, while also taking measures to encourage banks to lend more.
The central government’s budget deficit surged 70% in 2019, as it boosted spending in the face of the recession.
The government sees growth of 5% in 2020. The share of foreign holdings in Turkish domestic debt is now at a record low of 9.4%, after local assets were hit last week by one of the largest bouts of foreign disinvestment in the last five years, Deutsche Bank said yesterday. Sources told Reuters on Thursday the central bank plans to adjust its required reserve guidelines to keep a lid on some imports and avoid current account deterioration.