Current account deficit to GDP ratio at the end of the year is expected to be lower than the government’s forecast of 7.1% (or USD 60.7bn), initially envisaged in the medium term programme, the Central Bank said on Wednesday in a presentation to economists published on its website.
Turkey’s current account deficit widened 12.4% y/y to USD 4.45bn in June. The CA shortfall was USD 35.92bn in January-June, up from USD 30.03bn in the same period of 2012.
Domestic demand and exports grow at a moderate pace and exchange rate movements will have a temporary impact on inflation, the Bank said in the presentation. FX liquidity will also be provided from the gross reserves via ROM and FX required reserves if needed.
Central Bank’s governor Erdem Basci said last month that he was not worried about the country’s exchange rate. The depreciation of TRY is temporary and the Bank will not use interest rates as a tool to defend TRY as it has USD 40bn in reserves it can use to support the local currency, according to Basci.
The Bank did not make any prediction in the presentation about GDP growth this year.
GDP growth may be above 3% this year, Deputy PM Ali Babacan said on Tuesday, implying that this year’s growth will fall short of the government’s initial forecast of4%.
The government will announce its medium-term programme, which will include possible revisions to macro-economic forecasts, by mid-October, Babacan also said on Tuesday.
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