Turkey’s current account deficit, known as the “soft spot” of the Turkish economy, has been recovering for the past few years. After hitting 2015’s highest figure in March the deficit narrowed to $3,41 billion in April, taking the 12-month rolling deficit to $44,3 billion, the Turkish Central Bank announced. In the January-April period the current account deficit narrowed to $14.5 billion.
Compared with the same month of the previous year, direct investment to Turkey decreased by $461 million to a net inflow of $234 million. The central bank stated that the improvement in the deficit from last year was limited by direct investment outflows involving distributed profits, which have increased by $595 million to $892 million.
Turkey’s acting Economy Minister Nihat Zeybekci evaluated the data and said the fall in the current account deficit is linked to the decrease in imports. He also added that the year end data will be less than what the government has previously predicted.
According to analysts, although there is a decline in the current account deficit, the larger than expected figure is also linked to the increase of auto imports in April. The Automotive Manufacturers Association announced last week that 80 out of each 100 cars sold in Turkey in May were imported from abroad, marking the highest rate in 10 years.
On the other hand, volatile oil prices and a weaker Turkish lira are affecting current account figures, as well. However, since Turkey is largely dependent on energy imports, declining oil prices have had a positive effect on the country’s current account deficit. In 2014 Turkey’s balance of payments fell to $45.8 billion, a decrease of $18.82 million compared to 2013, taking the figure to its lowest level in four years.
After the data was released the Turkish lira stayed steady against the dollar, trading around 2.74 to the dollar.
Turkey’s current account deficit is expected to reach $37 billion by the end of this year.