Turkey posts current account deficit for six-straight month

Turkey reported a current account deficit for the sixth-straight month in May as imports exceeded exports.

The current account posted a deficit of $3.76 billion compared with a surplus of $1.07 billion in May 2019, the central bank said on its website on Monday. The 12-month rolling deficit increased to $8.24 billion, it said.

Turkey was expected to post a current account deficit of $4 billion for May, according to a Reuters poll of 12 institutions. The deficit was $5.06 billion in April.

Turkey’s economic stimulus, ratcheted up during the COVID-19 pandemic with the help of cheap lending from state-run banks, has increased demand for imported goods. Meanwhile, the coronavirus outbreak is limiting sales of Turkish goods and services abroad.

The central bank said there was a net outflow of $2.73 billion in cash earned from sales of goods, reflecting the import-export imbalance.

The current account deficit, excluding gold and energy – Turkey imports nearly all the energy it consumes - totaled $1.85 billion in May., the central bank said That compared with a $4.35 billion surplus in the same month of last year.

Turkey historically seeks to finance its current account deficit through revenue from tourism, foreign investment and other inflows. Tourism income fell to almost zero in May due to population lockdowns across the globe.

Portfolio investment registered a net outflow of $2.54 billion in May, the central bank said. Non-residents sold a net $1 billion of equities and a net $986 million of bonds. Direct investment totaled a net $118 million, increasing by $36 million compared with May last year.

The central banks foreign currency reserves rose by $2.72 billion in May. They had fallen by $8.61 billion in April as it sold dollars via state-run banks to support the lira.

The lira was little changed at 6.86 per dollar after the data was released. It fell to a record low of 7.269 per dollar in early May.