Turkey: C/A deficit deteriorates further
Emre Tekmen - Market Economics | 13 Nov 2013 10:54
At USD 3.3bn, September's current account deficit was higher than the market’s expectations (USD 2.7bn) and our above-consensus forecast (USD 3.0bn). In addition, January-August current account deficit was revised up by a total of USD 1.4bn, mainly due to lower tourism revenues. As a result, 12-month cumulative c/a deficit reached USD 59.1bn in September, from USD 58.5bn in August. Non-energy current account deficit also widened by USD 0.8bn to USD 9.3bn, on a 12-month cumulative basis. Turkey was a net gold importer in September as well, contrary to last year, and 12-month cumulative net gold imports reached a record high of USD 7.3bn. At the same time, we also note that seasonally adjusted current account deficit excluding gold and energy has been widening gradually since the start of the year.
The bulk of the external financing in September is achieved through private sector borrowing of USD 4.2bn, which implies a roll-over ratio of 151%. Unidentified inflows remained elevated at USD 1.7bn. Net inflows to bond and stock market were USD 1.9bn. Foreign deposits in Turkey declined by USD 2.2bn and Turkish corporates withdrew USD 1.9bn of deposits held abroad. The CBRT’s reserves increased by USD 0.6bn mainly due to the increase in reserve requirement holdings of the banks. FDI remained limited at USD 0.6bn.
Today’s data once again showed that Turkey’s current account deficit is likely to remain elevated, in the absence of a significant drop in oil prices, or a recession scenario. The underlying current account trend has been deteriorating, albeit very gradually. In addition, the unfavourable base effects due to the normalisation in gold trade are likely to remain in place till the year-end. The sizeable revisions to past month’s current account data led us to revise our end-2013 c/a deficit forecast to USD 61bn (7.5% of GDP) from an earlier projection of USD 59.5bn.
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