Turkey's current account gap falls to $1.79B

ANKARA

Turkey’s current account deficit stood at $1.79 billion for February, a fall of more than $1.5 billion year-on-year, the Central Bank said Monday.

The 12-month rolling deficit fell to $30.5 billion, down from $42.8 billion in February last year. A fall in the deficit on goods and primary income from employment and investments was the main reason for the reduction, the bank said.

“If a strong growth momentum in the first quarter of 2016 could be achieved, a current account deficit figure below 5 percent of GDP is likely,” Enver Erkan, an economist with ALB Securities, said.

Turkey, which depends on energy imports, has benefited from the fall in oil prices over the last two years but Erkan said this advantage would be less pronounced in 2016.

“Since oil prices have remained weak through 2015, we will feel the positive effect of low oil prices less than last year,” he told Anadolu Agency. “We forecast the annual current account deficit in 2016 could be around $35 billion.”

The current account deficit narrowed by $13.6 billion last year, or 30 percent year-on-year, to $32.2 billion.

Anadolu Agency’s Finance Analyst Haluk Burumcekci said consistently low energy import costs and high gold exports were positives for Turkey.

“Once more the annual decline on a monthly basis in the foreign trade deficit is the main driver seen in the improvement of February’s current account deficit,” he said.

“Also a lower primary budget deficit contributed to the overall outlook. However, the services sector budget surplus, lower than the same period of last year, limited the improvement.”

Burumcekci forecast a current account deficit of $38 billion in 2016.

Burcak Gezgin, an analyst at Alan Investment, said a possible decline in tourism revenue could challenge the deficit’s downward trend.

“A decline in tourism revenues, which is a strong contributor to the Turkish economy and current account balance, especially in the summer time, may change the positive current account deficit outlook to negative,” he warned.