Turkey may post biggest current account deficit since May 2018
Turkey may have posted the largest monthly current account deficit since May 2018 in December.
The deficit is expected to grow to $3.05 billion compared with $1.52 billion in December 2018, according to the median estimate in a Reuters poll of 12 economists published on Tuesday. That would be almost six times greater than the gap of $518 million reported for November. Forecasts ranged between $2.83 billion and $3.3 billion, Reuters said.
Turkey has a long history of current account deficits – the gap reached $58 billion on a 12-month basis in May 2018, equivalent to about 6.5 percent of GDP. But a currency crisis that erupted in August 2018 swung the balance into surplus as imports plummeted. Despite a revival in imports, the central bank said last month that the balance was expected to follow a moderate course in the coming period.
The current account will post an annual surplus of $1.18 billion in 2019, a first since 2001, according to the Reuters survey. The central bank is due to announce December data on Friday.
Turkey has been reliant on short-term, speculative inflows of foreign capital to help finance its current account deficits in recent years as longer-term investments decreased sharply. Any failure to attract such money pressures the lira.
The $518 million current account deficit for November had reduced Turkey’s 12-month rolling surplus to $2.75 billion, or 0.4 percent of economic output of $734 billion. The surplus had peaked at $5.9 billion in September. Turkey has posted a 12-month surplus since June.
Turkey’s latest economic programme, unveiled in September, predicts a current account surplus of 0.1 percent of GDP this year.
Preliminary foreign trade data suggests Turkey will post a current account deficit for January as well. Imports surged by an annual 19 percent to $19.2 billion last month, while exports rose by 6.1 percent to $14.8 billion, the Trade Ministry said on Feb. 3. That created a foreign trade deficit of $4.46 billion, greater than December's $4.3 billion.