Turkey’s current account gap at $3.15 billion, below forecasts

ANKARA

REUTERS photo

Turkey’s current account deficit totaled $3.15 billion in July, below forecasts, data from the Central Bank revealed Sept. 10. 

The 12-month deficit was announced at $45.03 billion. 

The deficit increased by 32 percent in July year on year due to rising domestic demand and decreasing exports, despite the positive effects of the oil plunge on the current account deficit. 

Turkey’s exports decreased by 13 percent in July to $10.8 billion compared to July of the previous year. 

The markets had expected a higher figure for the total current account deficit of around $3.5 billion, according to a Reuters poll. 

Turkey’s foreign trade will give strong support to a reduction in the current account deficit this year, continuing to rein in the gap from August, Economy Minister Nihat Zeybekci said in a written statement on Sept. 10, as reported by Reuters. 

“The increase in the current account was mainly attributable to a $964 million increase in the balance of goods compared to the same month of the previous year, recording $5.755 billion and $67 million decreases in service surpluses to $3.014 billion. Meanwhile, the primary income deficit decreased by $214 million to $528 million,” said the Central Bank in a written statement.

The non-monetary gold balance recorded a net import figure of $639 million in July, in contrast to net exports of $143 million observed in July 2014, according to the statement. 

Under the service balance, travel recorded a net inflow of $2.813 billion in July, decreasing by $44 million compared to the same period of the previous year, said the state lender. 

Investment income under the primary income balanced indicated a net outflow of $441 million, decreasing by $226 million in comparison to July 2014, it added.

Turkish Lira recovers from record-low levels

The Turkish Lira has recovered from its early losses against the U.S. dollar in the afternoon of Sept. 10 after data showed economic growth in Turkey rose to 3.8 percent in the second quarter.

The Turkish currency fell to a record low against the dollar in early morning trading on Sept. 10, dropping to 3.061 to the dollar, but then climbed back to levels around 3.042 after the GDP data was announced by the Turkish Statistics Institute (TÜİK).       

Most emerging market currencies are under pressure in anticipation of a possible interest rate hike by the Federal Reserve (Fed) at its next monetary policy meeting on Sept. 16. Domestic political instabilities and security concerns have, however, made the lira one of the worst performers this year. The Turkish currency has lost over 20 percent of its value against the dollar over this year.