Current account deficit shrinks to $1.24 billion May

ANKARA

Türkiye’s current account deficit came in at $1.24 billion in May, down from $5.4 billion in the previous month, marking the lowest since last October, according to data from the Central Bank on July 12.

In May last year, the current account gap was $7.8 billion.

Stability, confidence and resilience are increasing, and the current account deficit is no longer a significant problem, Finance Minister Mehmet Şimşek said on X, after the bank unveiled data, adding that the current account deficit to GDP ratio is expected to fall below 2.5 percent in the second quarter.

The ratio of foreign debt to national income is decreasing and reserve accumulation is accelerating, he stressed.

“We will achieve a sustainable current account deficit by economic transformation through structural reforms. Thus, we will permanently reduce our country's external financing needs,” Şimşek said.

In January-May, the current account balance recorded a $17.6 billion of deficit, down from $32.4 billion in the same period last year.

The annualized current account deficit fell from $31.7 billion in April to $25.1 billion. In May 2023, the annualized deficit was as high as $57 billion.

Goods deficit, which stood at $10.5 billion a year ago, shrank from $7.7 billion in April to $4.2 billion in May, with exports and imports amounting to $23.3 billion and $27.5 billion, respectively.

Trade deficit was $26.3 billion in January-May, significantly lower than the deficit of $47.2 billion the current account balance posted in the same period of 2023.

Gold and energy excluded current account indicated a net surplus of $3.26 billion in May, said the Central Bank.

Services recorded a net inflow of $4.72 billion, according to the numbers from the bank.

Under services, the travel item recorded a net inflow of $3.93 billion in May. Inflows under the travel item amounted to $12.66 billion in the first five months of 2024, up from an inflow of $11.62 billion in the same period of last year.

Direct investment inflows slowed from $859 billion in April to $361 million in May. Direct investment inflows amounted to $1.5 billion in January-May, down from $2.11 billion a year ago.

Portfolio investment recorded a net inflow of $5.64 billion in May, rising from $2.02 billion in the previous month, bringing total inflows to $11.5 billion in the first five months of 2024 against an outflow of $2.95 billion a year ago.

As regards to sub-items of liabilities, non-residents’ transactions on equity securities recorded net sales of $529 million, after net purchases of $360 million in April and government domestic debt securities recorded net purchases of $6.05 billion.