Turkey’s current account deficit widened 58.8% y/y to USD 2bn in August. This was slightly lower than the market consensus forecast of USD 2.2bn of deficit. In July, the current account deficit was USD 6bn.
In the first eight months of the year, the country’s current account deficit stood at USD 44.3bn, up from USD 35.4bn in the same period of 2012.
Foreign trade deficit rose 24.6% y/y to USD 5.6bn in August but declined from the previous months’ foreign trade gap of USD 8.2bn. Both exports and imports slowed in August compared to July. Exports eased to USD 12.1bn in August (a 12% y/y decline) from USD 14bn in July and imports fell to USD 17.7bn (a 3% y/y declined) from USD 22.3bn. Gold imports rose by USD 5.5bn y/y in January-August reaching USD 11.75bn while gold exports fell by USD 6.52bn y/y to USD 2.83bn, the Central Bank said.
On the financing side; FDI inflows were disappointing as net direct investment inflows declined to USD 460mn from USD 1.6bn in the previous month. Also August FDI was 31% lower compared to August 2012. FDI inflows financed only 8.3% of August’s current account deficit. After an USD 3.1bn of portfolio outflows in July, Turkey attracted USD 1.93bn of portfolio investments in August, but this still compared unfavourably with an inflow of USD 2.2bn in the same month of 2012. Tourism revenues rose 17% y/y and 26% m/m to USD 3.58bn.
The pace of outflow from Turkish equities slowed in August. In July, there was an outflow USD 605mn from Turkish equities and according to data of the Central Bank, equity outflows stood at USD 258mn in August. Investors purchased USD 1.06bn worth of government securities in August that compared favourably with an outflow of USD 2.6bn in the previous month. Inflows into government debt securities stood at USD 7.1bn in January-August versus an inflow of USD 12.7bn a year earlier.
There was an inflow of USD 2.87bn through net error & emission in August after an inflow of USD 4.87bn through this item, Central Bank data also showed. Net error & emission inflows stood at USD 3.02bn in the first eight months of the year, up from USD 2.7bn in the same period of 2012.
The government earlier this week announced its revised forecasts for the Turkish economy where it kept the current account deficit forecast for 2013 unchanged at 7.1% of GDP (or USD 58.8bn) but trimmed its estimate to 6.4% (USD 55.5bn) from 6.9% for 2014.
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