Turkey’s June current account deficit falls by 19.5% y/y

By bne IntelliNews August 11, 2015

Turkey’s June current account deficit declined by 19.5% y/y to $3.36bn, slightly higher than the market consensus forecast of $3bn, data of the central bank showed on August 11.

Foreign trade deficit was down by 23% y/y, declining to $4.8bn in the month. Imports fell by 12% y/y, but more worryingly exports exhibited a 7% y/y decline.

Net FDI inflows stood at $554mn in June, down from $861mn a year ago and $944mn in May 2015. Net FDI financed 17% of June’s current account deficit.

The central bank reported a net portfolio investment outflow of $661mn in June, after a $2.5bn of outflow in the previous months. Non-residents’ purchases of Turkish equities stood at a tiny $1mn, down from $74mn in May, while government domestic debt securities indicated a net sale of $452mn.

The bank also said there was outflow of $1.44bn under the “net error & omissions” item in June vs an inflow of $2bn in the previous month

Banks borrowed $119 million on net basis in June and $1.98bn in January-June through bond issues in international capital markets, said the central bank. The unexplained inflows amounted to $8.6bn in the first six months of the year, well above the $5.8bn of inflows registered a year ago.

Turkey’s current account deficit declined by 7% y/y to $22.7bn in H1 as foreign trade deficit narrowed by 15% y/y to $24.9bn. The 12-month rolling current account deficit declined to $44.7bn in June from $45.5bn in May. A recent Reuters poll of economists showed that the current account deficit is expected to be $35.8bn at the end of 2015.

Turkey's Balance of Payments (H1)
($ mn) 2014 2015 y/y
CURRENT ACCOUNT  (24,545)  (22,705) -7%
 Goods, Services and Primary Income  (25,024)  (23,118) -8%
 Goods and Services  (20,307)  (17,116) -16%
      foreign trade balance  (29,392)  (24,944) -15%
      exports  85,541  77,735 -9%
      imports  114,933  102,679 -11%
CAPITAL ACCOUNT  (24)  (2) -92%
FINANCIAL ACCOUNT  (18,752)  (14,088) -25%
 Net FDI  (4,702)  (4,170) -11%
      Net acquisition of financial assets  2,297  2,157 -6%
      Net incurrence of liabilities  6,999  6,327 -10%
 Net Portfolio Investment  (10,253)  4,010 -
      Net acquisition of financial assets  1,210  2,615 116%
      Net incurrence of liabilities  11,463  (1,395) -
NET ERRORS AND OMISSIONS  5,817  8,619 48%
Source: tcmb

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