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Turkish Current-Account Gap Probably Narrowed in December

Turkey’s current-account gap probably narrowed on an annual basis for the second consecutive month in December, boosting the central bank’s case that it’s reducing the deficit.

The shortfall was $6.5 billion, down from $7.5 billion a year earlier, according to the median estimate in a Bloomberg survey of nine economists. The gap narrowed in November for the first time since October 2009. The central bank will announce the figures at 10 a.m. in Ankara on Feb. 13.

Concern over Turkey’s ability to finance the gap helped drive the lira 18 percent lower against the dollar last year, the biggest depreciation among emerging-market currencies tracked by Bloomberg. Limits on credit growth and a weaker lira are narrowing the deficit and cheap lending by the U.S. Federal Reserve and the European Central Bank mean financing is plentiful, central bank Governor Erdem Basci said on Jan. 26.

“The current-account trend is toward narrowing, but it’s not taking place rapidly and the numbers are still high,” said Nihan Ziya-Erdem, an economist at Turkiye Garanti Bankasi AS, which forecasts growth of 2.7 percent this year. “The economic slowdown isn’t as steep as we expected and activity still looks lively.”

Prime Minister Recep Tayyip Erdogan, re-elected to a third term in office in June, aims to slow growth to 4 percent this year from more than 8 percent in 2011, according to government plans announced on Oct. 14.

Turkey imports nearly all its energy needs, creating a trade deficit that’s been widened by domestic demand for foreign goods. The central bank’s lending curbs seek to restrain that domestic demand.

The deficit in the 12 months through November was $77.8 billion, about 10 percent of estimated gross domestic product. A shortfall of that scale represents a risk to economic stability, Fitch Ratings said in November.

To contact the reporter on this story: Steve Bryant in Ankara at sbryant5@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

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