Current account balance posts surplus for fifth month in a row

ANKARA

Türkiye has posted a current account surplus for the fifth month in a row in October, according to data from the Central Bank on Dec. 12.

The current account surplus came in at $1.88 billion in October, which was above economists’ expectations of a surplus of $1.3 billion.

The improvement in the current account balance contributes to the disinflation process by strengthening economic and financial stability, Vice President Cevdet Yılmaz said, commenting on the latest data.

The course of demand components and the decrease in the foreign trade deficit confirm that demand-side pressures on inflation have eased, the vice president wrote on X.

“With the impact of the rebalancing policies and reforms we will implement within the scope of the medium-term program, we expect the current account deficit to be around 1 percent of national income by the end of 2024,” Yılmaz said.

Excluding gold and energy, the current account produced a net surplus of $7.16 billion, said the bank in a statement.

The goods deficit widened from $3.13 billion in September to $3.54 billion in October with exports and imports at $23.4 billion and $26.9 billion, respectively.

Services recorded a net inflow of $6.45 billion, according to the Central Bank data. Under services, travel item recorded a net inflow of $5.12 billion. In January-October, travel income amounted to $42.88 billion, up from $37.8 billion in the same period of last year.

Direct investments recorded a net outflow of $204 million in October, after registering an inflow of $679 million in the previous month.

In the first 10 months of 2024, direct investment inflows stood at $3.26 billion, declining from an inflow of $3.6 billion in January-October 2023.

Under portfolio investments there was a net inflow of $587 million in October, which brought the total portfolio investment inflows to $12.02 billion, significantly higher than the inflows of $1.08 billion a year ago.

“As regards to sub-items of liabilities, non-residents’ transactions on equity securities recorded net sales $642 million and government domestic debt securities recorded net purchases of $978 million [in October],” the bank said in the statement.

The current account deficit declined from $36.05 billion in January-November 2023 to $3.3 billion in the first 10 months of 2024.

External financing
Meanwhile,  Finance Minister Mehmet Şimşek told state-run Anadolu Agency that he amount of external financing obtained at favorable terms from international institutions, including the World Bank, has reached $7.7 billion this year,

This figure is expected to go even higher at the end of the year, Şimşek said.

“We continue to secure long-term external financing with favorable conditions for our development-oriented projects…The World Bank approved approximately $1.2 billion in financing for Türkiye this month,” the minister added.

Total financing from the World Bank to be extended to Türkiye’s development-oriented projects will reach $5 billion, Şimşek said.