Türkiye's current account balance moved into surplus for the first time in nine months, official data showed on Tuesday, driven by lower gold imports, flat energy bill and stronger tourism revenues.
The broadest measure of trade and investment flows with the outside world had a surplus of $407 million in June, according to data published by the central bank.
Türkiye's current account balance was last in the black in September 2023. The June gap shifted from an upwardly revised $1.02 billion deficit in May.
Excluding gold and energy, the current account posted a surplus of $4.5 billion for the month, the Central Bank of the Republic of Türkiye (CBRT) said.
From January through June, the deficit narrowed by 55% year-over-year to $16.5 billion.
The annualized shortfall more than halved to $24.8 billion from $53.6 billion a year ago and slightly deteriorated from $24.5 billion in the previous month.
"We expect the annual current account deficit's ratio to GDP to decrease to around 2.2% in the second quarter and fall below 2% in the third quarter," said Treasury and Finance Minister Mehmet Şimşek on social media platform X.
Strong tourism revenues and a lower energy import bill have helped alleviate pressures on the economy during a reversal in economic policies.
Analysts have been pointing out that the slowdown in gold and energy imports indicates a deficit of less than $30 billion for the whole year.
The trade shortfall, a major component of the current account, narrowed to $4.14 billion in June, the CBRT said.
Trade Minister Ömer Bolat said the annualized trade gap had declined by $34.6 billion since last May, when the current account deficit peaked at $57 billion.
"The annualized current account deficit has fallen by 56.4% compared to May 2023 with the impact of the policies implemented in foreign trade," Bolat wrote on X.
He predicted the gap would slide below $20 billion in July, citing data showing a trade shortfall declining by 42.3% as a rise in exports maintained pace and imports continued to fall.
The government forecasted a deficit of $34.7 billion in 2024, but Şimşek has recently said it would be in the range of $24 billion-$27 billion for the rest of the year.
"The positive developments in the trade balance are making economic growth more balanced while also strengthening macroeconomic stability through improvements in the current account," said Bolat.
"Throughout 2024, the trend of increasing exports and decreasing imports is expected to continue, with foreign trade anticipated to contribute positively to both the current account balance and economic growth."
The services sector saw a net surplus of $5.6 billion in June, the data showed. Within the services sector, the travel category contributed a net inflow of $4.8 billion.
Net errors and omissions, or money of unknown origin, amounted to about $5.5 billion after three consecutive months of outflows
A net surplus in services reached $5 billion, driven by strong tourism revenue
Direct investment recorded a net inflow of $447 million and portfolio investments had a net inflow of $591 million.
Reserves also continued to improve significantly, with a monthly increase of $1.24 billion.
The current account deficit widened from $7.2 billion in 2021 to $48.8 billion in 2022, largely driven by high imports of gold and elevated energy prices following Russia's invasion of Ukraine.
It narrowed to $45.2 billion last year, above the government forecast of $42.5 billion.
The current account is the most complete measure of trade because it includes investment flows and trade in merchandise and services. A deficit means Türkiye is consuming more from overseas than it is selling abroad.
The CBRT is spearheading the pivot to more orthodox policies and has hiked its benchmark policy rate by 4,150 basis points since June last year to lower inflation.
The bank has kept the rate unchanged at 50% since March to allow the tightening to have an impact. The annual inflation eased to 61.78% in July, accelerating what is expected to be a sustained slide.
The government has introduced tax and fee hikes to boost its budget income.
Authorities also introduced measures to cap strong domestic demand, one of the main reasons for higher imports, and to boost investments and exports.
In his post, Şimşek said the government's medium-term economic program has been yielding positive outcomes in terms of rebalancing and disinflation. But he stressed they are also seeing what he said were short-term negative impacts on the labor market.
Official data on Monday showed the unemployment rate rose in June to an 11-month high of 9.2%. Şimşek and Vice President Cevdet Yılmaz see the rate ending the year below the government's forecast of 10.3%, set in its economic program.
"We are implementing our program with determination to ensure sustainable prosperity. The quality of the labor market is as important as its quantity," said the minister.
"In this context, we are focusing on structural reforms that prioritize productivity growth, strengthening human capital, and advancing digital transformation."
Yılmaz said on Tuesday the government is closely monitoring disinflation's short-term effects on growth and employment and is committed to efforts aimed at mitigating these impacts.
"Our goal is to achieve balanced growth with stability, expand employment opportunities, and sustainably increase social welfare through human-centered and inclusive development," he wrote on X.
"Although there may be challenges in balancing inflation control with growth in the short term, these two objectives are compatible in the medium and long term. Price stability strengthens predictability and confidence, providing a solid foundation for sustainable growth."
