Current account deficit higher than expectations

ISTANBUL- Hürriyet Daily News

İzmir port is one of Turkey’s most important trade conduits on the country’s Aegean coast. A large foreign trade deficit is the biggest burden on Turkey’s economy. AA photo

Turkey ran a current account deficit of roughly $5.99 billion in January 2012, which was worse than the market consensus of $5.4 billion, Central Bank data revealed yesterday.

January figures registered a 0.41 percent drop from the same period a year earlier when the deficit in January 2011 was at $6 billion.

“In contrast to expectations, improvement in the current account deficit on a 12-month rolling basis, which started in November 2011, appears to have stopped just after two months. In fact, seasonally adjusted data also confirmed this,” Özgür Altuğ, chief economist at BGC Partners Turkey, said in a note to investors yesterday.

The annual current account deficit was at $78.6 billion last October; the figure dropped to $77.2 billion in December. The pace of the decrease slowed to $77.1 billion in January.

Gross revenues in tourism posted a 23 percent year-on-year increase, hitting $972 million, mainly thanks to a contraction in tourism expenditures.

Deficit ratio still at 10 pct
As for financing, there were gross foreign direct investment inflows of $0.8 billion.

The ratio of the current account deficit to the gross domestic product ratio has continued at around 10 percent.

There was a net inflow of $1.4 billion in monthly portfolio due to banks’ bond issues abroad, the net Eurobond issue and the equity purchases of foreigners.

However, although many analysts expect this ratio to fall gradually, they said rising petroleum prices and relatively strong economic activity in Turkey may limit the drop in the current account deficit this year.The foreign trade deficit is the most important item in Turkey’s current account deficit. The foreign trade deficit was at $7 billion, exceeding the market expectation of $6.3 billion.