Türkiye: April current account deficit at 5.4 billion dollars

Contrary to expectations, the current account deficit widened to $5.4 billion in April (expected: -4.4 billion USD, Dinamik Yatırım: -4 billion USD). In this way, the current account deficit increased from the revised $4.9 billion in March and $2.5 billion in April 2022. Thus, the current account balance had a deficit for 18 months in a row. In the 4-month period, the current account deficit was $29.7 billion (January-April 2022: $20.3 billion). Thus, the twelve-month current account deficit rose from $54.9 billion to $57.8 billion in April 2023.

The most important reason for the negative performance in the current account deficit is that the rate of increase in imports is much higher than in exports. Although imports contracted by 4.8% on an annual basis in the relevant data for April, the contraction in exports was 17.2%. In the balance of payments, the goods trade balance had the most significant impact by giving a deficit of 7.2 billion dollars in April. One of the negative factors for exports was that the TL remained in the overvalued region due to some measures aimed at keeping the exchange rate stable for a long time. The services balance, on the other hand, gave a surplus of 2.9 billion dollars. With the tourism season, we can see the effect of high foreign exchange inflows with a slightly more positive picture. Therefore, the positive contribution from service revenues is expected to continue.

On the financing side, net FDI inflow was $784 million in April, while net portfolio outflow was $1.2 billion. While net sales of stocks were 37 million dollars, net sales of debt instruments were 6 million dollars. While net errors and omissions were $3.68 billion, official reserves decreased by $8.16 billion.

Turkey's C/A account, million USD, 12 months… Source: CBRT, Dinamik Yatırım

The dollar/TL rate has reached the level of 23.65 as of today. Free fluctuation of the exchange rate and less intervention is a positive situation in terms of exports, but we know that the exporter wishes for a slightly depreciating TL in terms of a healthy development. Bringing the exchange rate to a realistic level will also eliminate a hindering factor for the development of exports. On the other hand, it should be noted that the lack of foreign exchange poses a problem for the manufacturing sector, because production cannot be made without importing and almost all of the intermediate goods are imported by the manufacturing sector.

Data from the Ministry of Commerce revealed a foreign deficit of $12.7 billion in May. Tourism revenues, on the other hand, will increase due to seasonal effects as of May. On the other hand, the high increase in imports seems to keep the current account deficit at high levels. We anticipate that the net tourism income, which was 2.2 billion dollars in April, will increase to 3.3 billion dollars in May. Thus, the current account deficit may come close to 9 billion dollars in May.

Kaynak Dinamik Yatırım- Enver Erkan

Hibya Haber Ajansı