Current account gap narrows in November

Bloomberg

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The deficit contracted to $559 million from $3.3 billion in November 2007, the Central Bank in Ankara said on its Web site late Monday. The gap, the widest measure of trade in goods and services, was forecast at $1.2 billion, according to the median estimate of 15 economists in a Bloomberg e-mail survey.

Turkey’s deficit is contracting as the global crisis drives the economy closer to recession, curbing demand for imported goods. Falling global energy prices are also helping narrow the gap, easing the pressure on the government to draw in foreign investment to finance it.

"There’s a serious contraction in both exports and imports but it’s more pronounced in imports," said Aslı Savranoğlu, an economist for EFG Istanbul Securities. "If petrol prices stay where they are we can expect the deficit to narrow to about $17 billion in 2009 from perhaps $42 billion in 2008."

The foreign trade gap in November was $2.7 billion, the smallest shortfall in more than three years. Exports fell 17.5 percent to $9.3 billion in November from a year earlier, theTurkish Statistical Institution, or TÜİK, agency said Dec. 30. Imports decreased 27.5 percent to $12.1 billion, the institution said.

Deficit to decline faster
Turkey’s current-account deficit will narrow more this year than earlier estimated as falling commodity prices and lower demand for goods and raw materials from abroad cuts the import bill, Morgan Stanley said.

The shortfall will total $17.9 billion, or 2.5 percent of gross domestic product, or GDP, rather than the $29.9 billion, or 4.3 percent of GDP, forecast previously, Tevfik Aksoy, an economist at Morgan Stanley in Istanbul, wrote in a client note today.

The narrowing gap reduces the financing needs of the country, which is negotiating a loan accord from the International Monetary Fund, or IMF, after international investors scorched by losses in the global credit crunch pulled money out of emerging markets. The current-account deficit is contracting as the fallout from the financial crisis has put Turkey on the brink of recession.

"This is yet another indication of the pace at which the economy had been responding to the global downturn," Aksoy said. "We are confident that Turkey will be able to close the financing gap in 2009 with a decent IMF package in place."

The 2008 deficit probably was $42 billion, Aksoy estimates. Foreign direct investment will probably decline to $10 billion this year, from $13.7 billion last year, he forecast.