Turkey’s current-account deficit narrowed for a fifth month after the central bank tightened monetary policy to curb domestic spending that helped push the gap to a record.
The March deficit was $6.1 billion, matching the median estimate in a Bloomberg survey of eight economists and down from $9.6 billion in the same month last year, the central bank in Ankara said on its website today. The deficit was $4.2 billion in February.
Turkey’s current-account gap swelled to a record of more than 10 percent of gross domestic product last year as a booming economy sucked in imports. The lira’s slide in the second half of the year, coupled with the central bank’s monetary tightening to rein in loan growth, have helped narrow the deficit since October.
“We are at or very close to the end of the sequential improvement in external deficit, given the central bank’s lira-supportive policy stance, high oil prices and gradual pickup in economic activity,” Inan Demir, chief economist at Finansbank AS in Istanbul, said in e-mailed comments. He said the gap will shrink to $63 billion, or 7.7 percent of GDP, by year-end as “base effects will continue to support a narrowing.”
Central bank Governor Erdem Basci, who varies funding costs for banks on a daily basis within a so-called rate corridor, has tightened policy since February, pushing borrowing rates on the interbank market above 10 percent this week.
The lira has gained about 5.8 percent against the dollar this year, after an 18 percent slump in 2011. The currency dropped 0.2 percent to 1.7871 per dollar at 11:37 a.m. in Istanbul. Two-year benchmark bond yields widened 7 basis points, or 0.07 percentage point, to 9.52 percent.
The current-account gap narrowed to $71.8 billion in March from $75.2 billion the previous month on a 12-month basis, after peaking at $78.6 billion in October.
“External rebalancing may cut pace in the coming months to a more gradual improvement,” Haluk Burumcekci, chief economist at EFG Istanbul Equities, said in an e-mailed report today. “Export performance was not strong as the first quarter of 2012 in April and there are some supporting signs -- consumer confidence, consumer loan growth -- that the domestic demand will improve sequentially.”