By IndraStra Global News Team
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.