Turkey Current Account Gap Narrows for 12th Month on Imports<\/p>\n
By David Neylan – Dec 11, 2012 11:41 AM GMT+0100<\/p>\n
Turkey\u2019s current-account deficit narrowed for the 12th straight month in October as slowing economic growth curbed demand for imported goods and gold sales to Iran and the U.A.E. boosted exports.<\/p>\n
The gap shrank to $2 billion from $4.5 billion a year earlier, the central bank in Ankara said on its website today. It was forecast at $2 billion according to the median estimate of 11 economists surveyed by Bloomberg.<\/p>\n
Turkey\u2019s current-account deficit has dropped to about a fifth of the March 2011 high of $9.5 billion. As shipments of precious metals abroad slow and the central bank seeks to spur growth, the narrowing of the gap may soon bottom out, or reverse, analysts said.<\/p>\n
\u201cI think the narrowing trend in the current account deficit has come, or is coming to an end,\u201d Inan Demir, chief economist at Finansbank AS in Istanbul, said in a telephone interview. \u201cI would be much more confident of this in the absence of the gold exports.\u201d<\/p>\n
Turkey\u2019s gold trade with neighboring Iran has helped shrink its trade deficit over the past year, with precious metals accounting for about half of the almost $21 billion decline. That\u2019s calmed investor concern over the current-account gap, and helped persuade Fitch Ratings to give Turkey its first investment-grade rating since 1994. Two-year note yields slid 524 basis points this year, the most worldwide.<\/p>\n
Gold Exports<\/p>\n
Turkey exported $11.9 billion of gold in the first 10 months of the year, with 85 percent of it going to Iran and the United Arab Emirates.<\/p>\n
The current-account deficit may fall to $57.3 billion by year-end, according to the central bank\u2019s latest bi-weekly survey of economists. That compares with $77.1 billion last year, when Turkey had the second-biggest deficit in the world, behind the U.S.<\/p>\n
Turkey\u2019s economy grew at a pace of 1.6 percent in the third quarter, according to figures released yesterday. It was the slowest rate since the third quarter of 2009.<\/p>\n
The deficit \u201cshould be bottoming out if we think economic activity will pick up,\u201d Sengul Dagdeviren, chief economist of ING Bank AS in Istanbul, said in a phone interview. \u201cIf we see a narrowing in the current account, it won\u2019t be a good sign as it will mean weaker growth is continuing.\u201d<\/p>\n
Lower Inflation<\/p>\n
Turkey\u2019s inflation rate declined to 6.4 percent in November, the lowest in 14 months, freeing central bank Governor Erdem Basci to reduce his benchmark 5.75 percent interest rate and stimulate growth in the economy of almost $800 billion. Inflation was 10.5 percent at the end of last year.<\/p>\n
Basci last cut his benchmark policy rate to 5.75 percent in August 2011, extending a boom in lending that helped swell the current-account deficit to about 10 percent of gross domestic product by year-end.<\/p>\n
The lira strengthened 0.2 percent to 1.7866 per dollar at 11:46 a.m. in Istanbul today. Yields on benchmark two year bonds declined 1 basis point, or 0.1 percentage point, to 5.76 percent.<\/p>\n
via Turkey Current Account Gap Narrows for 12th Month on Imports – Bloomberg.<\/p>\n","protected":false},"excerpt":{"rendered":"
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