Turkey’s April current account deficit declines 31% y/y

By bne IntelliNews June 11, 2015

Turkey’s current account deficit declined by 31% y/y to $3.41bn in April, above the market consensus forecast of $3bn, data of the central bank showed on June 11.

Foreign trade deficit increased by 40% y/y to $3.33bn with exports falling 0.2% y/y and imports declining 11% y/y.

The central bank reported $570mn FDI inflows into the country, representing a 40% y/y decline, while the portfolio inflow also declined by 75% y/y to $1.15bn in the month which followed an outflow of $2.24bn in March and an outflow of $437mn in February. Inflows into Turkey’s equity market increased by 13% y/y to $652mn in April after $580mn outflow in the previous month and an outflow of $503mn in February. There was an outflow of $1bn from the government debt securities in April after the central bank reported an inflow of $444mn in the previous month.

The central bank also reported inflow of $2.89bn through “the net error and omission” item which was significantly high compared to the $258mn of inflows in March. The inflows under this item in the first four months of the year amounted to $6.98bn vs $6.29bn a year ago.

There was a net outflow of $29mn under banks borrowing item through bond issuances in international markets while other sectors borrowed $46mn through bond issuances in international markets on net basis, said the central bank.

Turkey’s current account deficit fell by 13% y/y to $14.5bn in January-April. The 12-month rolling current account deficit increased to $44.3bn in April from $45.8bn in March.

The government forecasts the current account deficit to be $46bn (or 5.4% of GDP) this year and $49.2bn (5.4% of GDP) next year. The OECD expects Turkey’s current account deficit to decline to 5.8% of GDP this year from 7.9% in 2014 while it projects the current account deficit to amount to 4.9% of GDP next year. According to the Central Bank’s May expectations survey, the country’s current account deficit is expected to be $38.3bn at the end of 2015 whereas the previous estimate in April was $37.9bn.

Turkey's Balance of Payments (January-April)

($ mn)

2014

2015

y/y

CURRENT ACCOUNT

 (16,716)

 (14,469)

-13%

 Goods, Services and Primary Income

 (16,999)

 (14,744)

-13%

 Goods and Services

 (13,706)

 (10,498)

-23%

      foreign trade balance

 (17,629)

 (14,518)

-18%

      exports

 57,229

 53,214

-7%

      imports

 74,858

 67,732

-10%

CAPITAL ACCOUNT

 (21)

 (2)

-90%

FINANCIAL ACCOUNT

 (10,445)

 (7,495)

-28%

 Net FDI

 (3,776)

 (2,621)

-31%

      Net acquisition of financial assets

 1,428

 1,407

-1%

      Net incurrence of liabilities

 5,204

 4,028

-23%

 Net Portfolio Investment

 (1,727)

 832

-

      Net acquisition of financial assets

 934

 1,130

21%

      Net incurrence of liabilities

 2,661

 298

-89%

NET ERRORS AND OMISSIONS

 6,292

 6,976

11%

Source: tcmb

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