Turkey’s current account gap widens as lira under pressure
Turkey’s current account widened to $4.81 billion in March, increasing 54 percent from a year earlier, as economic growth sucked in imports and investment exited the country.
The deficit was expected to grow to $4.15 billion. The 12-month deficit increased to $55.38 billion, or 6.2 percent of economic output. The gap in the first quarter almost doubled to $16.4 billion, according to data published by the central bank on Monday.
Turkey’s lira sank to a record low of 4.37 per dollar last week as investors worried that the authorities’ failure to rein in the deficit and double-digit inflation leaves the country particularly exposed to a deterioration in sentiment towards emerging markets. Investors have begun to withdraw cash from developing countries as the U.S. Federal Reserve continues to raise interest rates, making their assets less attractive.
The central bank’s official reserves shrank by $4.84 billion, it said.
Portfolio investment recorded a net outflow of $2.38 billion. Foreigners sold a net $361 million of stocks and $123 million of bonds during the month, the central bank said. Other investments saw an outflow of $1.59 billion, it said.
Investment income registered a net outflow of $1.24 billion, the central bank said, an increase of $218 million compared with the previous year.
Tourism income rose, climbing to a net $988 million, an increase of $239 million from March 2017, the bank said.
The lira weakened 0.1 percent to 4.32 per dollar at 10:48 a.m. in Istanbul. It fell to as low as 4.3519 earlier in the day.
President Recep Tayyip Erdoğan, who has opposed higher interest rates as a means to tackle Turkey’s economic problems, was due to speak to analysts in London later on Monday during a three-day trip to the United Kingdom that began on Sunday.