Deficit and revival of past
William Jackson, economist, Capital E.
On a 12-month rolling basis, Turkey’s trade deficit widened to $81.5 billion in January (equivalent to 10 percent of GDP), up from $60 billion in mid-2017. The rise in imports reflects the strength of domestic demand and the economy more generally in recent months. GDP expanded by 11.1 percent year-on-year in the third quarter of last year, and it looks like the economy expanded by around 7.0-7.5 percent yearon-year in the fourth quarter and in the first month of this year. However, the widening trade deficit is also a worrying sign that old problems in Turkey’s growth model are emerging once again. There’s nothing mechanical that means Turkey will suffer the same consequences any time soon.
The economy was hit hard by the financial market dislocation caused by the euro-zone debt crisis in 2011 and the “taper tantrum” in 2013. This time around, the economy might, for example, be vulnerable to a correction in global equity markets or fears about the pace of monetary tightening in the US. have made in the past.