Turkey’s current account recorded a deficit of $2.68 billion in November as expected, official data showed on Tuesday, flipping into the red after three months of surplus in which the government adopted a policy it says will address the shortfall.
The current account has improved from a deficit of $36.72 billion in 2020 and is expected to have ended 2021 at around $15 billion, according to recent Reuters polls.
The January-November cumulative deficit stood at $10.82 billion, according to the central bank data, which covered the period just before a volatile lira crash and recovery in December.
Goldman Sachs said the deficit in November was due to a sharp rise in imports and the seasonal fall in tourism.
“(We) expect the current account deficit to widen in 2022 as the improvement in the tourism sector only partially offset a higher energy import bill,” it said.
In recent months, authorities have described Turkey’s chronic current account deficits, largely due to energy and other imports, as a key problem facing the economy.
To tackle it, the government unveiled a so-called new economic program aimed at slashing interest rates to boost exports with a competitive exchange rate, even as inflation soared to 36% last month.
The central bank, under pressure from President Recep Tayyip Erdogan, cut rates by 500 basis points since September to 14%, sparking a crisis for the currency which lost 44% of its value last year. In turn, inflation hit its highest in 19 years.
“With the sharp depreciation in the lira, domestic demand and imports will likely follow a weaker course, leading to a somewhat better current account performance,” Goldman Sachs said.
