Turkey’s current account deficit reaches $5.15 billion in February

Turkey’s current account registered a deficit of $5.15 billion in February, more than double the amount in the same month last year, data from the central bank showed on Monday, as the soaring cost of energy imports widens the shortfall.

Wiping out Turkey’s chronic current account deficit, at $14.9 billion in 2021, has been one of the main goals under President Tayyip Erdogan’s new economic programme that also prioritises growth, exports and employment with low rates.

But Russia’s invasion of Ukraine has raised the price of oil, natural gas and grains, making it more difficult for Turkey to meet the shortfall, given that tourism revenue could also drop this year due to fewer arrivals from the two countries – both usually major sources of tourists.

The deficit for the first two months of the year stood at $12.14 billion, data showed, having reached $2.42 billion in February 2021.

Excluding gold and energy, the current account showed a surplus of $2.17 billion in February, compared with a surplus of $624 million in the same month last year.

The trade deficit component of the current account stood at $6 billion, up $3.9 billion from February 2021.

A current account surplus is now almost certainly out of reach this year, with the median estimate in the latest Reuters poll predicting a deficit $38.25 billion for 2022.

The 12-month cumulative deficit now stands at $21.85 billion, central bank data also showed.

Under Erdogan’s economic plan, the central bank has cut its policy rate by 500 basis points since September, which led to a currency crisis that saw the lira lose 44 per cent against the dollar last year. Compounded by soaring commodity prices, inflation surged to 61 per cent in March.

Separately, data from the Turkish Statistical Institute showed unemployment dropped 0.5 percentage points in February to 10.7 per cent.