Turkey: The end of rebalancing
At USD 5.6bn, January's current account deficit was slightly higher than the market consensus and our forecast (both at USD 5.3bn). Consequently, 12-month cumulative c/a deficit declined USD 0.1bn to USD 46.8bn. Non-energy current account balance remained unchanged at USD 5.5bn on a 12-month cumulative basis. The revision of Turkstat's tourism revenue estimations was reflected to BoP statistics, and as a result, 2012 c/a deficit was revised down to USD 46.9bn from USD 48.9bn, or 5.9% of GDP. Net errors and omissions were revised from USD 4bn to USD 2bn for 2012.
The main external financing item in January was private sector’s medium- and long-term borrowing (USD 3.4bn), which implied a rollover ratio of 97%. Net short-term borrowing (USD 1.8bn) and trade credits (USD 2.5bn) were also strong. Non-resident’s deposits increased by USD 2.5bn (o/w USD 1.2bn consists of TRY deposits), whereas private sector reduced their deposits abroad by USD 1.9bn. In addition, Treasury's USD 1.5bn eurobond issuance helped to finance the deficit. The CBRT's gross reserves increased by USD 3.7bn to USD 124bn.
Strong credit growth is likely to continue to help revive the domestic demand in the coming period. Consequently, we expect imports to pickup in the coming months and current account deficit to start to widen gradually from February. Accordingly, we forecast c/a deficit to reach USD 60bn or 6.7% of GDP this year.
Selim Çakır
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