Balance of payments data released on Tuesday in Turkey revealed that, far from narrowing, the country’s current account deficit remains as hefty as ever.
The deficit was $6.8bn for September, about 80 per cent greater than the same month a year before, bringing the rolling deficit for the previous 12 months to a new record, at $77.6bn.
This is not the script that was written by the Turkish central bank, which has been confidently predicting in recent months that demand growth would slacken, so reducing the deficit and so lessening Turkey’s vulnerability to external shocks. Nor was the sheer size of the deficit the only issue of concern in the latest figures.
As Ozgur Altug of BGC Partners in Istanbul notes, there was a net outflow of portfolio funds of more than $3bn in September, because of a sell-off in the bond market.
Despite an increase in foreign direct investment to more than $9bn for the first nine months of the year (more than double the previous year’s tally), portfolio funds remain a main source of financing of the deficit. Their recent volatility only highlights the vulnerability some economists are so worried about.
For more: Turkey: current account deficit swells | beyondbrics | News and views on emerging markets from the Financial Times – FT.com
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