Turkey’s current account deficit seen at $570 million in July: Reuters poll

FILE PHOTO: A view from the business and financial district of Levent in Istanbul
FILE PHOTO: FILE PHOTO: A man walks towards the entrance of OzdilekPark Shopping Center in the business and financial district of Levent, in Istanbul, Turkey September 8, 2020. REUTERS/Murad Sezer/File Photo

September 13, 2021

ISTANBUL (Reuters) – Turkey’s current account is expected to record a relatively small deficit of $570 million in July due largely to a partial recovery in tourism revenues, a Reuters poll showed on Tuesday.

For the full year, the median estimate of 11 economists was a $20 billion deficit, with responses ranging from $18 billion to $25 billion.

Turkey’s import-reliant economy, worth $717 billion in 2020, has been prone to big trade deficits and a boom-bust growth cycle that was exacerbated by the pandemic.

The current account recorded a deficit of $36.72 billion in 2020 due mostly to a sharp rise in the trade deficit and plunging tourism revenues due to coronavirus fallout.

The median estimate in the Reuters poll showed a deficit of $570 million in July, with estimates ranging between a deficit of $1 billion and a surplus of $39 million.

A major component of the current account, the trade deficit widened 51.3% year-on-year to $4.28 billion in July, according to the Turkish Statistical Institute.

An uptick in tourism revenue from last year, as well as exports are expected to narrow the deficit in 2021 as a whole compared to last year.

Last month, the central bank revised four data points, including trade credits and short-term external debt stock, which is also expected to impact the deficit for the full year.

For 2021 as a whole, the $20-billion forecast was lower than a government estimate of $21 billion released on Sunday as part of its medium-term projections, which also predicted it would drop to $18.6 billion next year.

Central Bank Governor Sahap Kavcioglu said in July that Turkey would record a current account surplus for the rest of the year.

Turkey’s 12-month current account ended 2019 in surplus for the first time since 2001, though the monthly reading dipped back towards the end of the year as the economy recovered from a recession brought on by a 2018 currency crisis.

The central bank is scheduled to announce July current account data at 0700 GMT on Sept. 13.

(Reporting by Ezgi Erkoyun and Ali Kucukgocmen; Editing by Ece Toksabay)