ISTANBUL (Reuters) – Turkey’s current account is expected to record a deficit of $4.5 billion in April, a Reuters poll showed on Tuesday, remaining high as measures against the coronavirus hamper exports and tourism revenues.
Turkey’s long history of current account deficits, which reached $52.4 billion on a 12-month basis in 2018, are again concerning investors as the lira weakens and the central bank’s foreign exchange reserves diminish.
While Turkey’s current account is now on a far stronger footing, large deficits leave economies reliant on speculative inflows of funds and potentially on reserves to finance the shortfall.
Forecasts ranged between deficits of $4 billion and $5 billion for April’s current account balance, according to the Reuters poll of nine economists. The median was $4.5 billion.
The largest part of the deficit comes from the foreign trade component, which saw a downturn in exports in April, as well as drastically lower income from tourism, said Daglar Ozkan, economist at Is Yatirim.
“We expect the biggest impact on the current account balance in April from a large fall in the services component since the travel income is near zero,” he said, adding that exports likely hit their lowest point in April.
The 12-month current account ended last year in surplus for the first time since 2001, though the monthly reading has dipped back into deficit as the economy strongly recovered from a recession brought on by a 2018 currency crisis.
The economy grew 0.9% last year and it is expected to slump again due to measures taken to curb the COVID-19 outbreak. The lira has fallen about 16% so far this year as worries have grown over potential balance-of-payments problems.
For all of 2020, the median estimate of six economists was for a current account deficit of $7.80 billion, up slightly from last month’s poll. Poll forecasts ranged between deficits of $3.5 billion and $15 billion.
Turkey’s foreign trade deficit, a main component of the current account, leapt 67% year-on-year in April to $4.56 billion according to the general trade system, data from the statistics institute shows.
Ozkan said he expects some recovery in exports starting in June, while imports remain at current levels, although tourism income will remain drastically low, at around half of the net income in 2019.
In March, the central bank revised current account data going back to 2013 as part of a new calculation method that trimmed historical deficits and boosted the 2019 surplus. The revisions totalled some $44 billion between 2013 and 2019.
The Turkish central bank is expected to announce April current account data at 0700 GMT on June 12.
Turkey’s April current account $4.5 billion in deficit: Reuters poll
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