Current account balance posts $2.56 billion deficit

ANKARA

Türkiye’s current account balance produced a deficit of $2.56 billion in January with the annualized gap continuing to shrink, data from the Central Bank has shown.

This was smaller than the $2.8 billion deficit most economists had predicted.

“We expect the current account deficit to be lower than our prediction of 3.1 percent [of GDP] in the medium-term program and a sustainable current account deficit level,” Finance Minister Mehmet Şimşek wrote on X, commenting on the latest Central Bank data.

With the decline in the foreign trade deficit, which continued in February, the ratio of current account deficit to national income will decrease below 3 percent at the end of the first quarter, according to Şimşek.

In February, the country’s foreign trade deficit fell more than 42 percent year-on-year to $7 billion.

This performance will further contribute to the disinflation process by strengthening macro-financial stability, Şimşek said.

In the medium-term program, the government forecast a current account deficit of $34.7 billion for 2024. It expects the deficit to shrink to $31.7 billion or 2.6 percent of GDP in 2025.

The annualized current account deficit fell from $52.64 billion in January 2023 to $37.5 billion in January this year, the Central Bank data showed. This deficit climbed to as high as $60 billion in May of last year, but gradually declined in the following months.

Gold and energy excluded, the current account balance indicated a net surplus of $3.6 billion in January, said the bank.

The goods deficit declined from $12.6 billion in January last year to $4.5 billion, while services recorded a net surplus of $2.8 billion. Under services, travel items recorded a net inflow of $2.2 billion. Türkiye aims to welcome 60 million tourists and $60 billion tourism revenues this year.

Net inflows under direct investments were $661 million in January, while portfolio investments recorded a net inflow of $1.1 billion.

“As regards to sub-items of liabilities, non-residents’ transactions on equity securities and government domestic debt securities recorded net purchases $186 million and $264 million, respectively,” said the Central Bank.

Non-resident banks’ deposit accounts held within domestic banks increased by $1.7 billion, with an increase of $3 million in foreign currency and $1.7 billion in Turkish Lira accounts.

Official reserves decreased by $6.2 billion, according to data from the Central Bank.