Under the influence of the increase in the foreign trade deficit and the decrease in tourism revenues under the balance of services, the current account deficit gave a deficit above expectations in November last year, while economists predict that 2020 will be closed with a deficit of close to $ 40 billion.
Central Bank of the Republic of Turkey (CBRT) According to the data, in November last year, the current account deficit rose to $ 4 billion 63 million, its 12-month current account deficit as a result took place at 37 billion 974 million dollars. Economists who participated in the survey conducted by AA Finans predicted that the current account would have a deficit of 3.4 billion dollars in November.
Commenting on the issue, AA Finance Analyst and economist Haluk Bür Spiderçi said that the increase in the annual current account deficit could continue more moderately due to the ongoing weakness in tourism and transportation revenues and the base effect.
Bür Spiderçi stated that the current account balance excluding energy, which is followed in terms of the main trend of the current account balance in addition to the worsening in the headline deficit, gave a deficit of 13 billion dollars, and that the current account balance excluding energy and gold (core) fell to a surplus of 8.8 billion dollars.
Bür Spiderçi pointed out that despite the rapid decline in exports after the epidemic, a rapid increase in the current account deficit was observed due to the increase in imports with the increase in domestic demand, “The high annual increase in the range with the help of the parity while the export recovered later on, balanced the high course of imports. While its lack of significant strength keeps the risks on imports upward, the limited recovery in tourism and transportation revenues suggests that the rise in the current account deficit will continue at least until March. ” he spoke.
Stating that the increase in the foreign trade deficit and the sharp fall in tourism and transportation revenues were effective in the worsening of the current account deficit in November, Bür Spiderçi said:
“The foreign trade deficit increased by 153.5 percent on an annual basis in November. In addition, tourism revenues and tourism expenditures remained low in the balance of services, which dropped $ 1 billion in tourism net revenues on an annual basis. While there was a 43.9 percent decrease in shuttle trade, transportation. A 59 percent decline was recorded in revenues, resulting in a limited surplus of $ 555 million, while the primary income balance, which mainly consists of direct investments, had a low deficit compared to last year. With the current account deficit and limited financing, there was a decrease of 145 million dollars in official reserves. “
“CUT-OFF OF THE DOMESTIC DEMAND INCREASE MAY BE POSITIVE ON THE CURRENT BALANCE”
Haluk Bür Spiderçi said that the Ministry of Commerce data, which is an important leading indicator for imports and exports, indicate that there will be a limited decrease in the foreign trade deficit in December compared to 2019.
Stating that the factors affecting the increase in the current account deficit will continue for a while, Bür Spiderçi made the following evaluations:
“It is observed that the current surplus reached in 2019 has started to decrease rapidly since August and turned into a high deficit with the pandemic. Although it has recovered partially in the recent period, the fact that oil prices are below the 2019 average of $ 65 continues to reduce the current account deficit and is written to the positive household. In 2018, the decrease in energy imports approached $ 11.8 billion compared to the same period of 2019. In gold trade, the net deficit of $ 9.3 billion in 2019 remains high due to both residents’ interest in savings and jewelry and the increasing share in CBRT reserves. While tourism net revenues will close at $ 25.7 billion in 2019, the revenue loss here could reach $ 17 billion. In this context, it can be said that the decline in energy imports is far from compensating for the increase in gold imports and the fall in tourism net revenues.
Stating that the recovery observed in the EU market and in global growth in general has a positive effect on the growth rate of exports, Bür Spiderçi said, “Moreover, the deceleration in domestic demand with the slowdown in domestic credit growth may have a positive effect on the current account balance, but this effect seems to be more visible in 2021. In recent surveys, the median value for the current account balance for the year 2020 rose to $ 37 billion and the maximum deficit forecast to $ 39.8 billion. the probability seems high. ” used the expressions.
“SIGNIFICANT DECREASE IN CURRENT DEFICIT IS STRONGLY POSSIBLE”
Gedik Investment Economist Serkan Gönençler also reminded that the current account deficit expectations for November of the last year were 3.8 billion dollars and the market median was 3.6 billion dollars.
Gönençler, pointing out that the 12-month cumulative current account deficit reached 38 billion dollars in November, with data of 4.1 billion dollars exceeding expectations, and said:
“After the current account deficit reached approximately 39 billion dollars (5.6 percent of the national income) by the end of 2020, we think that it will continue to increase for a while and reach 40-41 billion dollars as of February. However, the slowdown in imports that we anticipated afterwards, increased TL interest rates. The current account deficit is likely to enter a downward trend with the possibility of a decrease in gold import demand and the normalization in tourism revenues, especially the potential decline in net gold imports, which reached $ 22 billion in 2020, making a significant contribution to the current account deficit. Based on the assumption of normalization in revenues, we think that the current account deficit may decline to a little below $ 20 billion by the end of 2021, as the downward trend accelerates especially in the second half of the year.It should be noted that there are risks in both directions in this forecast due to uncertainties regarding gold demand and tourism revenues. despite the risks n, normalization in tourism revenues and a significant decrease in the current account deficit is highly likely. “
“SIGNIFIC DECREASE IN TRAVEL REVENUES HAS EFFECTIVE IN CURRENT DEFICIT”
In the report prepared by Integral Yatırım Menkul Değerler, it was stated that the most striking item of last year under the balance of services in the balance of payments table was travel revenues.
In the report, which stated that the significant decrease in travel revenues throughout the last year was effective in the current account deficit, “Travel income decreased by $ 964 million compared to the same month of 2019 and decreased to $ 583 million. While the current account, excluding gold and energy, had a surplus of $ 4 billion 94 million in November 2019. gave a surplus of $ 632 million this month. ” expressions were used.
In the report, it is predicted that the inflows may increase in December on the portfolio investments side, and said, “According to the December data of the Ministry of Commerce, we think that we will get a higher current account deficit in December. We will probably end the year with a current account deficit of around 40 billion dollars.” was evaluated.
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