Turkey’s current-account deficit narrowed for a sixth month in April after the lira’s decline and tighter monetary policy curbed imports.
The deficit was $5 billion in the month, down from $7.7 billion a year earlier, the central bank in Ankara said on its website today. It was forecast at $5 billion, according to the median estimate of seven economists surveyed by Bloomberg. The 12-month cumulative deficit narrowed to $69.2 billion, the lowest since May last year.
Turkey’s current account deficit widened to a record of more than 10 percent of gross domestic product last year. Since then the central bank, which started varying borrowing costs on a daily basis in October, has tightened policy to curb the credit boom that fueled demand for imports. The lira also fell more than 13 percent in the 12 months through April, making exports more competitive.
The deficit “is on track to decline to around 8 percent of GDP,” Inan Demir, an economist at Finansbank AS in Istanbul, said in an e-mailed note.
The lira gained 0.4 percent to 1.8144 per dollar at 10:45 a.m. in Istanbul today, extending a six-day rally.
Foreign direct investment dropped to $430 million in April, the lowest this year, according to the central bank figures. Turkey is increasingly dependent on short-term borrowing, mostly by banks, to finance the current-account deficit, increasing the risks to the $800 billion economy.
“Further escalation of the euro-zone debt crisis might lead to a marked deterioration in financing conditions” that would force a reduction in the current-account gap at the cost of a slump in output, Demir said.