Turkey’s current account gap wider than expected

ANKARA

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Turkey’s current account gap stood wider than expected at $3.2 billion in February, the Turkish Central Bank said on April 10.

“The decrease in the current account deficit is mainly attributed to a $346 million decrease in foreign trade, with a deficit recording $3.1 million, and a $38 million increase in services surplus reaching $724 million. Contrary to this, the improvement in the current account deficit was partially offset by a $238 million increase in the primary income deficit, now valued at $853 million,” said the Central Bank.

The gap in the current account, however, shrank to $3.2 billion from $3.3 billion a year earlier, the Bank added.

The gap narrowed for the third month in a row, as weak domestic demand curtailed Turkey’s imports and continued decreases in energy costs.

According to the Central Bank’s data, the country’s current account gap stood at $5.2 billion in the first two months of the year. The 12-month gap decreased in February to $42.8 billion from $42.9 billion in the previous month.

Analysts expect more decreases in the current account deficit within the coming months along with expectations of a slowdown in the economy and a decreasing trend in energy costs.

Turkey’s GDP slowed in 2014 and demand has been weak in the early months of this year, according to the official data.

The GDP only grew 2.9 per cent in 2014, compared with the 2013 rate of 4.4 per cent.

For March, it was expected that there would be a temporary pause in the improvement of the current account gap, Central Bank Governor Erdem Başçı said at a conference in Ankara on April 9.

“Due to the rise in the car imports in March, we will see improvement in the gap to resume temporarily,” he said, adding the narrowing trend in the current account deficit is expected to continue after March, with the help of the decreasing energy prices.