Turkish Current-Account Gap Narrows More Than Forecast on Lira

(Bloomberg) -- Turkey’s current-account gap in March narrowed to almost a 10th of the deficit a year earlier, as accelerated declines in the lira and weak consumer demand continued to curb imports.

The country’s current account -- the broadest measure of trade and investment -- recorded a deficit of $590 million, the central bank said on Monday. The median of 12 forecasts in a Bloomberg survey was for a gap of $1 billion. The lira dropped 4.2 percent against the dollar in March, making it the worst-performing currency in emerging markets after the Argentine peso.

Key Insights

• The 12-month rolling gap fell to $12.8 billion from $17 billion in February and down from a peak of $58.1 billion in May. It shrank partly because the period now excludes a $4.7 billion deficit in March 2018
• Official reserves fell $5.7 billion, showing the central bank ran down its foreign-currency coffers ahead of March 31 elections
• Net errors and omissions, or capital movement of unknown origin, showed a monthly outflow of $4.3 billion, the most since 2017

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• “Following a significant weakening in the Lira, Turkey’s current account was eliminated at the end of 2018. Nevertheless, given the accumulation of a large negative net international investment position, it is likely to take a number of years of healthy current-account flows to adjust the large negative stock of external imbalances,” Goldman Sachs Group Inc. economists Kevin Daly and Clemens Grafe said in report dated May 10

--With assistance from Harumi Ichikura.

To contact the reporter on this story: Cagan Koc in Istanbul at ckoc2@bloomberg.net

To contact the editors responsible for this story: Onur Ant at oant@bloomberg.net, Paul Abelsky, Constantine Courcoulas

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