By Beril Akman
(Bloomberg) — Turkey’s current-account balance stayed deep
in the red in February, a key vulnerability for the economy as
President Recep Tayyip Erdogan’s government tries to keep the
lira and inflation in check ahead of elections next month.
The shortfall in the broadest measure of trade in goods and
services was $8.78 billion, the Turkish central bank said in a
report on Monday, more than forecast by economists. That
compares with a record deficit in January that was revised to
$10 billion and a gap of $5.3 billion in February 2022.
With Turkey long hobbled by trade imbalances, Erdogan
envisions the economy generating a current-account surplus by
lifting exports thanks to a weak currency. But Russia’s war
against Ukraine has pushed up energy prices while exports
haven’t been able to keep up with imports.
The two main drivers of the deficit have been purchases of
energy and gold, especially as households increasingly turned to
bullion to shield themselves against inflation that climbed over
85% last year.
Though Turkey limited some gold imports in the aftermath of
the deadly earthquakes in February, net non-monetary imports of
the precious metal reached nearly $4 billion, Monday’s data
showed.
While price gains have started to cool, economists still
expect year-end inflation to be above 40%, or eight times higher
than the central bank’s official target.
In a stark change from last year, capital of unknown origin
has also become a drag on the current account. Still, after
recording outflows in January, net errors and omissions saw an
inflow of about $1 billion that eased pressure on Turkey’s
reserves to fund the deficit.
Inflows related to net errors and omissions were a key
source of covering the gap in 2022. Central bank reserves fell
by $4.7 billion in February.
The services industry recorded a surplus of $2.3 billion,
mostly driven by tourism revenue. Portfolio investment had a net
inflow of $240 million.
To contact the reporter on this story:
Beril Akman in Ankara at [email protected]
To contact the editors responsible for this story:
Onur Ant at [email protected];
Sylvia Westall at [email protected]
Paul Abelsky
