The current account deficit of Türkiye widened to $9.85 billion (TL186.88 billion) in January, official data showed Monday, marking the highest level in four decades of available data, driven by a high energy bill and gold imports.
The reading marked the highest monthly deficit since 1984, the first year for which such data is available, according to the Central Bank of the Republic of Türkiye (CBRT) records. Before that time, data shows that Türkiye did not have an economy large enough to generate such a deficit.
Flipping Türkiye’s chronic current account deficit, at $48.7 billion in 2022, into a surplus has been one of the main goals under President Recep Tayyip Erdoğan’s new economic program.
Dubbed the Türkiye Economy Model, the program prioritizes low-interest rates to boost exports, production and investment and create new jobs and aims at eventually lowering inflation.
In a Reuters poll, the median estimate for the current account deficit in January was $10 billion, with forecasts ranging from $6 billion to $11.1 billion.
Türkiye’s trade deficit, a significant component of the current account, widened 38% in January to $14.24 billion, data showed, mainly due to the sharp rise in gold imports and the surging cost of energy imports.
The current account balance showed a deficit of $6.89 billion in the same period last year.
Excluding gold and energy, the current account showed a surplus of $2.6 billion in January, compared with an excess of $1.7 billion in the same month last year.
Economists expect the current account balance to record further deficits in the coming months and expect the debt to stand at $43.5 billion at the end of the year, the poll showed.
Economists are also monitoring the impact of the massive earthquakes that hit the country’s southeast in February and the course of energy and gold imports after authorities introduced measures to limit gold imports last month.
Business groups and economists estimate quake fallout costs of $100 billion and a shave of one to two percentage points off the country’s gross domestic product (GDP).
They say that some funding meant to boost production, employment and exports under the government’s economic plan will be directed toward aid and rebuilding efforts in the area.
The U.N. Development Programme (UNDP) said the damage from the disaster is estimated to be over $100 billion. The World Bank estimated that the quakes had caused more than $34 billion in damage, with recovery likely to double that sum.
Last month, the country’s central bank lowered its policy rate by 50 basis points to 8.5% to support growth after the earthquakes, saying the cheaper borrowing cost would bolster recovery efforts. That brought the overall easing trend to 550 basis points since August last year.
The central bank justified the cuts by saying financial conditions must remain supportive of maintaining industrial production growth. It cited the need for more stimulus in the face of the earthquakes when it delivered the latest cut.