Mobile  |  About us  |  Photos  |  Videos  |  Subscriptions  |  RSS Feeds  |  Today's Paper  |  Classifieds  |  Contact Us
The Daily Star
MONDAY, 21 APR 2014
11:50 AM Beirut time
Weather    
Beirut
20 °C
Blom Index
BLOM
1,214.01down
Middle East
Follow this story Print RSS Feed ePaper share this
Turkey reveals scale of deficit behind lira’s plunge
Agence France Presse
A+ A-

ISTANBUL: Turkey ran up a huge deficit on its external accounts last year, data showed Thursday, highlighting a critical weak point for the damaged economy and devalued lira.

But the central bank, which revealed the figures, said the account balance should improve this year, as devaluation and tighter policy helped exports and crimped imports.

Hit recently by a currency crisis, the country’s deficit – a key weak spot – showed an increase of $16.507 billion compared to the outcome at the same time last year, soaring to $65 billion (47 billion euros).

The figure was driven upward by an increase in the foreign trade deficit and soaring imports, the bank said in its annual report. But central bank chief Erdem Basci sounded confident that the deficit would shrink this year.

“There will be a considerable improvement in the current account deficit in 2014,” he said, referring to a recent plunge in the value of the lira.

At London-based Capital Economist, analyst William Jackson, commented: “Turkey’s current account deficit widened sharply at the end of last year, but the recent tightening of monetary policy means it could now start to narrow substantially.”

“In Turkey ... the recent tightening of monetary policy is likely to cause domestic demand to slow sharply, reining in the external shortfall,” he said.

In the afternoon trading Thursday, the lira was changing hands at 2.2065 against the dollar, a slight fall from the value Wednesday.

Deniz Cicek, an economist at Turkey’s Finansbank, also forecast a reduction in external deficit.

“We expect the substantial currency depreciation after December to lead to a considerable reduction in the external deficit in the forthcoming months,” he said.

He estimated that the current account deficit, which reached almost 8 percent of gross domestic product in 2013, would fall to 6 percent of GDP at the end of 2014.

The balance of payments on current account is a critically important measure of all current payments into and out of a country, including payments for trade, expatriate earnings and investment income.

The ruling Justice and Development Party has tried to reduce the current account deficit since it came to power in 2002.

But analysts have warned for months that the deficit, measuring the gap between all current payments into and out of the country, is a pivotal weak point in Turkey’s economy.

The country has been hit by market turmoil after a high-profile graft scandal implicating key government allies became public in mid-December, and after the U.S. Federal Reserve began tapering its stimulus package, causing investment to flow out of many emerging markets.

The Turkish lira lost over 10 percent in two months before the Turkish central bank raised interest rates in late January, containing further pressure on the currency.

The government has insisted that its target for 4-percent growth of the economy this year remains intact although the analysts have revised their forecasts downward.

The tensions also come as the country braces for a highly-charged election cycle this year starting with the local polls in March.

 
A version of this article appeared in the print edition of The Daily Star on February 14, 2014, on page 5.
Home Middle East
 
     
 
Turkey
Advertisement
Comments  

Your feedback is important to us!

We invite all our readers to share with us their views and comments about this article.

Disclaimer: Comments submitted by third parties on this site are the sole responsibility of the individual(s) whose content is submitted. The Daily Star accepts no responsibility for the content of comment(s), including, without limitation, any error, omission or inaccuracy therein. Please note that your email address will NOT appear on the site.

comments powered by Disqus
Story Summary
Turkey ran up a huge deficit on its external accounts last year, data showed Thursday, highlighting a critical weak point for the damaged economy and devalued lira.

Hit recently by a currency crisis, the country's deficit – a key weak spot – showed an increase of $16.507 billion compared to the outcome at the same time last year, soaring to $65 billion (47 billion euros).

"We expect the substantial currency depreciation after December to lead to a considerable reduction in the external deficit in the forthcoming months," he said.

He estimated that the current account deficit, which reached almost 8 percent of gross domestic product in 2013, would fall to 6 percent of GDP at the end of 2014 .
Related Articles
 
 
Turkey’s fracking push won’t be stalled by bribery probe
Entities
Advertisement


Baabda 2014
Advertisement
Follow us on Facebook Follow us on Twitter Follow us on Linked In Follow us on Google+ Subscribe to our Live Feed
Multimedia
Images  
Pictures of the day
A selection of images from around the world- Monday April 21, 2014
View all view all
Advertisement
Rami G. Khouri
Rami G. Khouri
Why Israeli-Palestinian talks fail
Michael Young
Michael Young
Why confuse gibberish with knowledge?
David Ignatius
David Ignatius
Echoes of 1914 characterize the Ukraine crisis
View all view all
Advertisement
cartoon
 
Click to View Articles
 
 
News
Business
Opinion
Sports
Culture
Technology
Entertainment
Privacy Policy | Anti-Spamming Policy | Disclaimer | Copyright Notice
© 2014 The Daily Star - All Rights Reserved - Designed and Developed By IDS