Turkey’s current-account deficit shrank by almost 90% in August from the previous month, as a boom in tourism helps offset a yawning gap in trade.
(Bloomberg) — Turkey’s current-account deficit shrank by almost 90% in August from the previous month, as a boom in tourism helps offset a yawning gap in trade.
The broadest measure of trade and investment flows with the outside world had a shortfall of $619 million, compared with a revised deficit of $5.5 billion in July, according to data published by the central bank on Wednesday. Economists surveyed by Bloomberg expected a gap of $550 million in August.
Key to the improvement was an increase of almost $1 billion in travel income from July. That brought Turkey’s net surplus in services to $7.3 billion and helped make up for a goods deficit of $7.1 billion.
Turkey’s external finances are on the mend as tighter domestic policies look to hold back consumer demand that contributes to economic imbalances. But with the tourism season winding down, strong gold and energy imports risk exposing Turkey’s trade vulnerabilities again.
The government expects this year’s current account to run a deficit of 4% of gross domestic product, according to its medium-term program. Turkish Finance Minister Mehmet Simsek said earlier this week that the shortfall would narrow as the country “rebalances” economic growth, in part as a result of the support provided to exports.
In August, the current-account balance also benefited from an increase in official reserves and inflows in capital of unknown origin.
–With assistance from Joel Rinneby.
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