In August, the current account balance in Turkey gave a surplus of 528 million USD after recording deficit 9 months in a row. The monthly current account deficit figure was more positive than the market expectation (Tera: 0.0 billion USD) with a deficit of 0.1 billion USD and the revised July data with a deficit of 923 million USD. In the monthly period, the current account balance is more positive than 4,07 billion USD deficit compared to August of the previous year. On a 12-month basis, the current account deficit narrowed from 27.8 billion USD to 23 billion USD compared to the previous month.
As an economy with a constant structural current account deficit, the current account surplus is certainly positive, albeit periodically. On the other hand, when the recent TRY depreciation and the increase in exports are put side by side; It should be mentioned that the postiiveness is a cyclical effect rather than local currency deprecation’s contribution to exports. At this point, we do not see the TRY depreciation due to import-based input effect and the limits of Turkey's weight in the foreign trade of major economies, at a point that directly contributes to exports. Although foreign demand made a positive contribution in the part of the year so far; We think that the risks of global slowdown should be evaluated. In the balance of services, the positive contribution of tourism and other services seems to have been effective in the current account surplus. In the aforementioned item, a surplus of 4.08 billion USD was given compared to 1.8 billion USD in the same period of the previous year.
While net outflows originating from direct investments on the financing side were 319 million USD in August, it is seen that there was a net inflow of 1.34 billion USD on the portfolio side. While the net purchase of stocks was 523 million USD, the net purchase of debt instruments was 336 million USD. Official reserves increased by $13.2 billion in August compared to the previous month, with the IMF allocating $6.34 billion of Special Drawing Rights (SDR) to Turkey. In August 2021, the current account balance gave a surplus of 528 million USD, while net errors and omissions, that is, capital movements of unknown origin, showed a monthly inflow of 4.45 billion USD. In the first 8 months of the year, inflows due to net errors and omissions were 13.5 billion USD.
We think that the serious increase in energy prices should be followed in terms of the general state of the current account balance. Since Turkey is a foreign-dependent country in energy, the current account balance may be adversely affected by this situation in the coming periods. While the positive course of exports and tourism contributed; We anticipate that the import bill will increase due to items used in production such as raw materials, intermediate goods, energy, or items with no demand elasticity on consumer basis, rather than items with demand elasticity such as consumer goods. We expect the recent increase in global energy prices to form the basis for this situation. For this reason, we think that the current account balance will return to its open position after the positive effect of tourism wears off. While we keep our current account deficit expectation for the whole year as 20 billion USD, we maintain our current account deficit / GDP ratio expectation as 2.6%.
Kaynak Tera Yatırım-Enver Erkan
Hibya Haber Ajansı