Turkish current account gap doubles in one year

Despite the government’s ongoing efforts, Turkey’s current account deficit jumped 100.7 percent in the first nine months of the year compared with the same period in 2010, reaching $60.6 billion.

The gap, which has been taken under control from October onward, according to the Central Bank, expanded to $6.8 billion from $3.9 billion in the same month a year earlier, the Bank in Ankara said in a statement on its website yesterday. The figure stood at $4 billion a month earlier.

Speaking at a business meeting in Ankara, Finance Minister Mehmet Şimşek said he expected the gap narrow down in the last quarter of the year, gaining stability.

The current account gap problem was a structural one, the minister said, adding that the growth in Turkey’s domestic demand is between 15 and 16 percent annually, about 8 or 10 fold bigger than Europe. The 12-month gap stood at $77.7 billion, or 10.2 percent of the gross domestic product, according to the data.

“When viewed alongside other indicators including credit growth, retail sales and industrial production, today’s current account figure suggests that the re-balancing in the economy is occurring, but only very slowly,” Murat Ülgen, a regional chief economist at HSBC, said yesterday in a note to investors.

The cool-down in economy was slower than expected, so the gap will start recovering later than the forecasts according to ING Bank senior economist Muhammet Mercan.

In seasonally adjusted terms, monthly deficit, which was improving slightly on a month-on-month basis, posted a sharp deterioration reversing almost all the improvement in the last three months, said Özgür Altuğ, chief economist at BGC Partners.

“It is worth noting that gold imports continued to increase hinting that gold imports in one month were not one-off. Total net gold imports reached $4.5 billion in the first nine months of the year compared to net gold exports of $0.1 billion in the same period of last year.”

Altuğ forecast that the gap will stand at $78 billion for 2011.

Turkey’s budget deficit in October, meanwhile, widened from a year earlier to 1.9 billion liras ($1.1 billion), the Finance Ministry said. The gap expanded from 1.8 billion liras in the same month in 2010, the ministry said on its website. The budget deficit between January and October was down 92.6 percent when compared with the same term last year, standing at 1.7 billion liras.