Gap starts slowing from a high base in Turkey

Turkey’s current account deficit, a leading problem for the rapidly growing economy, slows down for a third month in a row. The adjustment has started but from a high base, says a lender
According to Industry Minister Ergün, a slow down in economy is supporting the struggle with the current account deficit. DAILY NEWS photo

According to Industry Minister Ergün, a slow down in economy is supporting the struggle with the current account deficit. DAILY NEWS photo

The slight slowdown in the Turkish economy has reflected on the country’s ever-growing current account deficit, according to Central Bank figures released yesterday.

The gap stood at $4 billion in August, the smallest since October last year, and way below from $5.3 billion a month earlier.

Still, compared with the $3.1 billion in August a year earlier, the nation’s balance of payments kept growing worse despite a slowdown.

The 12-month cumulative current account deficit increased to $75.1 billion in August from nearly $74.2 in July.

The gap was up 102.4 percent year-on-year in the first eight months of 2011, reaching $54.2 billion, basically due to the country’s large trade gap, the Central Bank said yesterday.

“The government has even taken precautions to slow down economic activity to lower the current account deficit,” Science, Industry and Technology Minister Nihat Ergün said Oct. 10.

Improvement is also related to an improvement in the trade gap, according to Akbank Economic Research.

The current account gap will end this year at between 9 and 10 percent of the gross domestic product, according to Central Bank Gov. Erdem Başçı.

Turkey’s Statistical Institute (TÜİK) data showed a day earlier that the country’s industrial output grew by 3.8 percent in August, compared to the same month last year, marking a slowdown and the lowest rate for 2011.

“The adjustment of the current account deficit has started, but from a high base, said TEB, the Turkish lender, in a statement to investors.

Non-energy current account deficit is set to contract in the coming months, most notably in November and December, it said.

“Monthly current-account deficit numbers have been moderating noticeably and are likely to continue doing so in the coming months,” Tevfik Aksoy, chief economist for the region at Morgan Stanley in London, said yesterday in e-mailed comments. “We expect the 12-month rolling deficit to commence a decline in November as base effects kick in.”

Tuesday, October 11, 2011
ANKARA – Hürriyet Daily News