Turkish current account deficit more than doubles
Turkey’s current account deficit more than doubled in January to $7.1 billion, worse than analysts’ estimates, as the trade deficit widened.
The shortfall grew from $2.7 billion in January 2017, the central bank said on its website on Monday. The rolling 12-month deficit rose to $51.6 billion.
The deficit was financed by portfolio inflows, which increased to $4.9 billion from $1.6 billion. Foreign direct investment fell to $288 million from $437 million.
Turkey is financing its growing current account gap, caused partly by government incentives to stimulate the economy, via short-term portfolio inflows into stocks and bonds as foreign investment in the country declines. This is raising concern that a sudden outflow of the short-term money could lead to a sudden reversal in economic growth and impact the lira.
Turkish companies realized net borrowing from abroad of $1.1 billion, while banks and the government repaid a net $88 million and $120 million, respectively, the central bank said.
The central bank’s official reserves recorded a net inflow of $4.4 billion.