In May, the current account balance in Turkey, gave 3.8 billion USD deficit. The current account deficit announced on a monthly basis appears to have been in line with market expectations. On the annualized basis, we have deepened the current account deficit position with 8.24 billion USD. As a reflection of the simultaneous supply and demand shock of the world economies due to Covid-19 in 2020, the contraction on the export and import side also increases the uncertainties regarding the current account deficit composition. Income items such as exports and tourism seem to have a weak trend due to the effects of the virus and will continue to do so. On the other hand, the indirect braking effect on exports continues due to imports of intermediate and investment goods. Although a recovery in domestic demand is supported by the impact of low interest loans in the short term, the current account deficit may tend to increase in the framework of its short-term reflection on import demand. On the finance side, net inflows originating from direct investments were realized as 118 million USD in May, while it was observed that there was a net outflow of 2.5 billion USD on the portfolio side. While net sales were 1 billion USD in equities, 986 million USD net sales were made in debt instruments. Official reserves increased by 2.7 billion USD. Although net reserves tend to decrease, we see that gross reserves are supported with swaps. While the current account balance gave a deficit of 16.7 billion USD in the period of January - May 2020, Net error and omission is observed to indicate a net outflow of 4.13 billion USD. It is difficult to predict how the current balance will shape the rest of the year. There will be a current account composition that is very much related to the recovery scenario of the economy. The surplus of the current balance in the 2018 - 2019 period was related to the contraction of the economy in that period. Decreasing import demand was a factor in this. Now, both exports are being pressed and if we do not count the temporary demand increase factor (automobile, electronics, white goods, etc.) brought by the loans in the coming period, imports may tend to decrease again as a result of the decrease in domestic demand. In this case, if current surplus is given, this will be due to the slow performance of the economy and low demand. It should be added that the second wave uncertainty regarding coronavirus makes it difficult to predict in this direction. Growth scenarios in the economy are now in a dimension that can be more closely associated with the demand component, so growth and current account deficit may tend to increase together. The fact that the virus epidemic causes shock in demand and supply simultaneously causes uncertainty in this direction. Source: Tera Menkul
Hibya News Agency
Hibya News Agency