Automotive Exports May 2019

Current account gap drops at its lowest since 2009
Picking up from where it left off
at the end of last year, Turkey
has continued to see a gradual
decline in its current account
deficit. With measures taken by the
government and the stabilization
process in the economy, the country’s
12-month rolling current account
deficit has dropped to $12.83 billion in
March, its lowest level since the end
of 2009. The monthly current account
deficit in March also saw its lowest
level since October 2015 and dropped
to $589 million, decreasing by $4.14
billion year-on-year, according to the
Central Bank of the Republic of Turkey
(CBRT) report released. The figure was
nearly $4.73 billion in the same month
of 2018. A group of 17 economists,
surveyed by Anadolu Agency, estimated
a $900-million deficit in March, while,
on the other hand, the median of 12
forecast in a Bloomberg survey was for
a gap of $1 billion. Economists expect
the country’s current account deficit
to maintain its trend and continue to
narrow down in April as well and drop
below $10 billion. Decline to continue
rapidly during first half of this year
Haluk Bürümcekçi, said recovery in the
current account balance will continue
until end of the first half of 2019.
“Lower foreign trade deficit versus
the last year and posting surplus of
services item were main factors for
recovering of the current account
deficit,” he noted.
Bürümcekçi said that he expected the
country’s year-end current account
deficit will be $10 billion.
Banu Kıvci Tokalı, the chief economist
of HalkInvest, a subsidiary of state
lender HalkBank, stressed the current
account deficit could drop to $8-10
billion in April, of which data will be
released in June. She underlined that
the decline in the deficit would continue
rapidly during the first half of the
current year due to policies to support
exports, the base effect and moderate
energy prices. Tokali forecast that
the country would close the year with
a $19 billion current account deficit.
“The current-account-deficit-to-GDP
ratio, which was 5.6 percent in 2017
and 3.6 percent in 2018, could fall to 2.6
percent by the end of 2019,” she added.
Orkun Gödek, DenizBank Investment
Group strategist, highlighted that the
current account deficit of $589 million
was under the expectations of $1 billion
in March.
“In the first quarter, the current
account deficit was $1.9 billion, while
it was $16.2 billion in the same quarter
last year,” he said. In an interview ,
Treasury and Finance Minister Berat
Albayrak said the current account
deficit, which nearly hit $60 billion last
year, will nearly be zeroed by the end of
May. Albayrak said the current account
balance and surplus were in a period
of rapid recovery and that there would
be no external financing requirement in
the next period. The central bank said
in its report that the development in the
current account is mainly attributable
to a $3.7-billion decrease in the goods
deficit recording net outflow of $916
million. The CBRT also said Turkey’s
current account deficit – excluding
gold and energy – posted a $3.5-billion
surplus in March 2019, versus a
$573-million deficit in the same month
last year.
“Services item realized net inflow of
$1.3 billion increasing by $113 million
compared to March 2018,” the bank
said. It added that travel item under
services recorded a net inflow of $1.04
billion, rising by $55 million compared
with March 2018.
Previously, current account deficit fell
88.4 percent in January to $813 million
deficit, indicating a decrease of $6.22
million compared to January of the
previous year, bringing the 12-month
rolling deficit to $21.59 billion, the
lowest level of 105 months.
In February, it fell to $718 million, down
by $3.78 billion from the same month
last year. The 12-month rolling deficit
reached $17 billion in the month.
Economists forecast that the 2019-end
deficit will be $13.8 billion.
Last year, the current account balance
posted a deficit of around $27.6 billion,
improving from a nearly $47.5 billion
deficit in 2017. It realized at around
3.5 percent of the country’s gross
domestic product. The figure was the
lowest since 2009, while Turkey’s
highest annual current account deficit
over the last decade was seen in 2011,
with $74.4 billion. The country’s new
economic program, announced in
September 2018, targets a currentaccount-deficit-to-GDP
ratio of 3.3
percent this year, 2.7 percent in 2020
and 2.6 percent in 2021.
May 2019
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