Turkey's Current Account Recorded Higher-than-expected US$ 2.48 Billion Surplus
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Turkey's Current Account Recorded Higher-than-expected US$ 2.48 Billion Surplus

By IndraStra Global News Team

Turkey's Current Account Recorded Higher-than-expected US$ 2.48 Billion Surplus

On November 12, 2019, the Central Bank of the Republic of Turkey's (Türkiye Cumhuriyet Merkez Bankası, TCMB) current account recorded a higher-than-expected US$ 2.48 billion surplus, an increase of US$ 599 million when compared to September of the previous year. The balance of payments (BoP) figures showed the country's 12-month rolling surplus amounted to US$ 5.89 billion.

This development in the current account is mainly attributable to US$ 48 million decrease in goods deficit, recording US$ 867 million and US$ 694 million increase in the services surplus recording net inflow of US$4.32 billion.

Travel items, which constitute a major part of the services account, ran a net inflow of nearly US$ 3.5 billion in September, increasing by US$ 619 million on an annual basis. 

The country's gold and energy excluded current account surplus recorded US$ 5.79 billion indicating an increase of US$ 670 million compared to September of the previous year.

An Anadolu Agency survey on Monday showed that economists had projected current account balance to post a surplus of US$ 2 billion in August/September 2019. The estimates of a group of 14 economists range between US$ 1.7 billion and US$ 2.4 billion. The survey also revealed the end-2019 current account balance is forecast to register a surplus of US$ 200 million.

According to Reuters, "The current account balance has been one of the main concerns of investors because a large deficit makes the economy reliant on the foreign speculative inflow of funds to finance the shortfall."

The surplus has helped steady the Turkish Lira (₺), which lost almost 30 percent of its value last year because the country previously relied on speculative flows of capital to balance its books. The lira was little changed at 5.77 per $1 in Istanbul on Tuesday. Losses this year total of about 8 percent.

Last year, the current account balance posted a deficit of around US$ 27.6 billion, improving from a nearly US$ 47.5 billion deficit in 2017. The figure was the lowest since 2009, while Turkey’s highest annual current account deficit over the last decade was seen in 2011, with US$ 74.4 billion.

NOTE: Turkey's new economic program, unveiled in September (2019), forecasts a current-account-surplus-to-GDP ratio of 0.1 percent for 2019. The program targets a current-account-deficit-to-GDP ratio of 1.2% next year and 0.8% in 2021.