Türkiye’s Current Account Registers Surplus for the First Time in Almost Two Years

Türkiye’s current account in June registered a surplus for the first time in almost two years, official data showed Friday, driven partly by robust tourism and lower energy bills.

Surplus of $674 Million

The balance registered a surplus of $674 million (TL 18.23 billion), swinging from a $7.84 billion deficit in May, the Central Bank of the Republic of Türkiye (CBRT) said. It marked the first surplus since October 2021.

Larger Than Expected Surplus

The figure came in larger than expected by market surveys. A forecast in a Reuters poll was for a surplus of around $426 million. An Anadolu Agency (AA) survey forecasted a surplus of $422 million.

Net Surplus Excluding Gold and Energy

Excluding gold and energy, the two main drivers of the deficit so far, the balance registered a net surplus of $5.58 billion in June, the central bank data showed.

Trade Gap and Services Industry

The trade gap came in at $3.69 billion, while the services industry posted a net surplus of $5.02 billion. Travel items, under services, recorded a net inflow of $4.2 billion.

Income and Investments

Primary income recorded a net outflow of $799 million, whereas secondary income indicated a net inflow of $151 million, the bank said. In June, direct investments saw a net inflow of $135 million.

Expected Improvement and Government Policies

The balance was expected to improve on seasonal factors, including a lower energy import bill, high tourism income, and monetary tightening that started after the May elections. President Recep Tayyip Erdoğan’s government has orchestrated a U-turn away from policies based on interest rate cuts that had been accompanied by a steep fall in the Turkish lira and soaring inflation.

Monetary Tightening and Inflation

Since June, the country’s central bank has reversed and hiked its policy rate by 900 basis points to address inflation, which leaped to a 25-year high above 85% last year but subsequently eased to as low as 38.21% in June. It rose again to nearly 48% last month due to the lira’s decline and various tax hikes, and officials have acknowledged it would rise further toward the year-end.

CBRT Governor’s Outlook

CBRT Governor Hafize Gaye Erkan last month said the impact of the monetary tightening cycle would result in an improvement in the current account in the second half of 2023.

Current Account Deficit in 2022

In 2022, Türkiye’s current account deficit was at nearly $48.77 billion.