Monthly current account deficit was announced as 1.235 billion USD in May. In the Reuters survey, the expectation for the current account balance was 1.5 billion USD in May. Current account deficit remained below expectations on a monthly basis. The 12-month current account deficit was realized as 25.19 billion dollars and the current account deficit fell below 30 billion dollars after almost 2 years.
As the local elections are over and that the rate hikes have stabilized the currency there was 4.472 million dollars of net errors and omission inflow during May, as reverse flows gained pace.
The central bank statement is as follows:
In May, current account recorded net deficit of USD 1,235 million. Goods deficit recorded USD 4,199 million. Gold and energy excluded current account indicated net surplus of USD 3,263 million. Services recorded a net inflow of USD 4,724 million. Under services, travel item recorded a net inflow of USD 3,915 million. Primary income recorded a net outflow of USD 1,607 million and secondary income recorded net outflow of USD 153 million.
Direct investment recorded net inflow of USD 361 million. Portfolio investment recorded a net inflow of USD 5,637 million. As regards to sub-items of liabilities, non-residents’ transactions on equity securities recorded net sales USD 529 million and government domestic debt securities recorded net purchases of USD 6,051 million. Regarding the bond issues in international capital markets; banks and other sectors realized net borrowing of USD 452 million and USD 270 million, respectively. Under other investment, Turkish banks’ currency and deposits within their foreign correspondent bank accounts decreased by USD 4,254 million. Non-resident banks’ deposit accounts held within domestic banks increased by USD 739 million, with a decrease of USD 368 million in foreign currency and an increase of USD 1,107 million in Turkish lira accounts. Regarding the loans provided from abroad; General Government realized net repayments of USD 26 million, while banks and other sectors realized borrowing of USD 3,420 million and USD 356 million, respectively.
Official reserves increased by USD 17,593 million.
Simsek declares success with the current account deficit
Minister of Treasury and Finance Mehmet Şimşek announced that the annual current account deficit decreased to 25.2 billion dollars in May, the lowest level since June 2022. Minister Şimşek’s statements on his social media account are as follows:
‘Stability, confidence and resilience are increasing, the current account deficit is no longer a major problem. The ratio of external debt to national income is falling and reserve accumulation is accelerating. Annual current account deficit narrowed to $25.2 billion in May, the lowest level since June 2022. In addition to the decline in the current account deficit, the favorable external financing outlook continues. In the first five months of the year, portfolio inflows reached USD 19.1 billion. The long-term external debt rollover ratios of the banking and corporate sectors rose from 97 percent and 73 percent in January-May last year to 160 percent and 123 percent, respectively, in the same period of this year. We expect the ratio of the current account deficit to national income to fall below 2.5 percent in the second quarter. We will achieve sustainable current account deficit by realizing economic transformation through structural reforms. Thus, we will permanently reduce our country’s need for external financing.”