Turkey: Current account deficit widens with the increasing trade deficit in November

In November, the current account balance in Turkey, gave USD 4.06 billion deficit. While the monthly current account deficit was realized slightly above the market expectations of 3.56 billion USD, it increased from 15 million USD in the same period of the previous year.

In November, the current account balance in Turkey, gave USD 4.06 billion deficit. While the monthly current account deficit was realized slightly above the market expectations of 3.56 billion USD, it increased from 15 million USD in the same period of the previous year. On an annualized basis, on the current account balance side, there was an increase from 33.8 billion USD in October to 38 billion USD as of November. The current account balance had a deficit for the 13th month in a row as the foreign trade deficit widened due to the increase in gold imports.

 

The effects of the deterioration in the external balance due to the increase in imports as an effect of the rapid loan growth brought about by loose financial conditions in 2020 on the balance of payments continue. Net goods trade increased by 2.9 billion USD compared to the same month of 2019 and reached 3.84 billion USD, which was effective in the widening of the current account deficit. The loss effect in the services balance continues, as well, net inflows in this item decreased by 1.5 billion USD in November compared to the same period of the previous year and decreased to 555 million USD. In November, 632 million USD surplus was given in the balance of core payments, excluding gold and energy. Non-monetary gold item had a net deficit of 2.53 billion USD in November, with the effect of gold imports of 2.57 billion USD.

 

While the net inflows from direct investments on the financing side were 299 million USD in November, it is observed that there was a net inflow of 1.3 billion USD on the portfolio side. Net buying was 1.28 billion USD in stocks, while a net purchase of 607 million USD was made in debt instruments. Official reserves decreased by 145 million USD during this period. The policies aimed at supporting TRY, which were implemented before the November period when the Central Bank and the economic management changed, caused a decrease in the reserves due to the sales of foreign currency exchange by state banks. During the implementation phase of orthodox policies, there will be efforts to increase the reserves, and at the same time, the need to use reserves in financing the current account deficit will decrease considerably. During the January - November 2020 period, the current account balance had a deficit of 35.2 billion USD, while net errors and omissions or capital movements of unknown origin showed a monthly inflow of 3.02 billion USD, indicating a net outflow of 2.86 billion USD in the first 11 months of this year.

 

In the course of the current account deficit in 2021, the effects of the pandemic dynamics on the foreign trade balance and balance of services will be determinant. In the pandemic year, we observed that while the foreign trade deficit increased as a reflection of the rapid increase in imports compared to exports, the weight of gold imports in total imports increased. The economic recovery of our main markets is important for the course of our exports, so we will monitor the global effects of vaccination. In 2020, we observed the negative impact of the pandemic in the tourism season on the balance of services through the item of travel revenues. The gradual recovery to be achieved with vaccinations is also important in this respect. Because in this area, we were able to generate about 8 billion USD net income in the first 11 months of the year. This amount was 24.6 billion USD in the 11-month period last year. This indicates that when the December data are announced, we would have a loss of nearly 20 billion USD on an annual basis.

 

Kaynak Tera Yatırım
Hibya Haber Ajansı