2023-11-13 17:08:00
Turkey reported a current account surplus in September, being the second time since the end of 2022 that it has achieved such a performance, given that the mitigation of the trade deficit supports the consolidation of external finances, writes Bloomberg, quoted by Agerpres.
Turkey ended up having one of the highest inflation rates in the worldPhoto: Khalil Hamra / AP / Profimedia
Data released Monday by Turkey’s Central Bank showed the current account surplus reached $1.9 billion in September, while analysts polled by Bloomberg had expected $1.4 billion. Data for August was revised downward, showing a current account deficit of $357 million.
Data from September show how the tightening of monetary policy led to a reduction in demand for goods from abroad, by increasing borrowing costs and limiting domestic credit growth. The government expects a current account deficit of 4% of GDP this year, before easing to 3.1% of GDP in 2024.
On October 27, the Central Bank of Turkey decided to increase the benchmark interest rate from 30% to 35%. Economist Liam Peach of Capital Economics expects the Central Bank of Turkey to continue raising interest rates by 500 basis points at the next two meetings this year, which would result in improving macroeconomic imbalances.
In the past two years, the lira has depreciated by nearly 70% after President Tayyip Erdogan sacked four governors at Turkey’s Central Bank in four years, pushed for interest rate cuts despite high inflation, which topped 85% last year .
Restoring confidence in the Turkish lira is also a necessity for reducing gold purchases, which have long been a brake on the current account, say analysts from QNB Finansbank.
The slowdown in gold imports was supported by a rise in interest rates on sterling deposits in September, according to economists at Goldman Sachs Group Inc. Net non-monetary gold imports fell from about $3 billion in August to $1.4 billion in September.
On the whole of last year, Turkey’s current account deficit reached 48.7 billion dollars, and for this year economists expect a level of 45 billion dollars.
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