Turkey’s current account deficit fell by 16% y/y to $4.2bn in December, just a touch below the market consensus forecast for a figure of $4.3bn.
The current account shortfall, the economy’s Achilles’ heel, was thus $32.6bn last year versus $32.1bn in 2015, data from the central bank showed on February 14.
The government’s current account deficit forecast for 2017 is $32bn or 4.2% of GDP.
In December, exports increased by 10% y/y to $13.5bn, while imports were up 2% y/y to $17.7bn, leading to a foreign trade gap of $4.2bn. That represents a 17% decline compared with the same month of 2015.
Tourism revenues, an important source of hard currency, rose by 1% y/y to $700mn in December, but full-year tourism revenues declined to $13.7bn from $21.3bn in 2015.
Net FDI inflows fell by 1% y/y in December to $1.54bn. In 2016, net FDI stood at $9bn, down from $12.45bn in 2015. Foreign investment inflows financed 28% of the country’s current account shortfall last year.
The central bank also reported a net portfolio inflow of $1.91bn in the month, a 95% y/y increase. There was an inflow of $118mn into the country’s equity market in December. Last year, inflows into Turkish equities amounted to $823mn vs an outflow of $2.4bn in 2015.
The domestic government debt securities market saw an outflow of $414mn in December, but inflows into the market were $823mn in 2016 overall against an outflow of $7.7bn in the previous year.
Data also showed an inflow of $1.96bn through net errors and omissions. Unregistered capital inflows that reached $11.1bn last year helped the country finance its large current account shortfall.
Turkey's Balance of Payments | |||
($ mn) | 2015 | 2016 | y/y |
CURRENT ACCOUNT | -32,118 | -32,605 | 2% |
Goods, Services and Primary Income | -33,548 | -34,359 | 2% |
Goods and Services | -23,906 | -25,350 | 6% |
Foreign trade balance | -48,114 | -40,746 | -15% |
Exports | 151,970 | 150,222 | -1% |
Imports | 200,084 | 190,968 | -5% |
CAPITAL ACCOUNT | -21 | 23 | - |
FINANCIAL ACCOUNT | -21,941 | -21,513 | -2% |
Net FDI | -12,455 | -8,998 | -28% |
Net acquisition of financial assets | 5,095 | 3,118 | -39% |
Net incurrence of liabilities | 17,550 | 12,116 | -31% |
Net Portfolio Investment | 15,719 | -6,404 | - |
Net acquisition of financial assets | 6,129 | 1,447 | -76% |
Net incurrence of liabilities | -9,590 | 7,851 | - |
NET ERRORS AND OMISSIONS | 10,198 | 11,069 | 9% |
Source: tcmb |