Türkiye's current account balance registered a lower-than-expected $5.3 billion (TL 171.84 billion) deficit in April, official data showed Monday.

The shortfall widened from a $4.4 billion deficit in March and $5.1 billion in April 2023, the Central Bank of the Republic of Türkiye (CBRT) said.

From January through April, the balance saw a $16.1 billion deficit, decreasing from the $29.7 billion gap in the same period last year.

Economists point out that the slowdown in gold and energy imports indicates a current account deficit of less than $30 billion for the whole year, and they continue to revise their year-end expectations downward.

The annualized current account deficit rose to $31.5 billion in April driven by the increase in foreign trade deficit due to the Ramadan Bayram, also known as Eid al-Fitr, said Treasury and Finance Minister Mehmet Şimşek.

Excluding gold and energy, the balance recorded a $597 million shortfall in April, said the CBRT.

The goods deficit, a major component of the current account, reached $7.6 billion in April, while the services sector ran a net surplus of $3.1 billion. Under the services sector, travel had a net inflow of $2.5 billion in April.

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.

A Reuters poll of seven economists projected a $6.1 billion gap for April, with forecasts ranging from $5.5 billion to $6.7 billion.

Economist Haluk Bürümcekçi of Bürümcekçi Consulting pointed out that gold imports lost pace again in May.

Bürümcekçi said the $13.5 billion improvement in the first four-month deficit from a year ago mainly stemmed from lower gold and energy imports.

"For a more sustainable course in the current account, it seems necessary for domestic demand-driven growth to slow down more significantly with monetary policy, macro-prudential policies, and additional fiscal measures in terms of expenditure and income," he noted.

Şimşek said the positive trend in external financing inflows continues.

"While there was a net outflow of $1.5 billion in portfolio investments in the first four months of last year, there was a net inflow of $5.8 billion in the same period of this year," he noted.

"The external debt rollover ratios, including medium- to long-term bonds, increased from 90% to 158% for the banking sector, and from 72% to 116% for the non-bank private sector during the same period," he added.

"Within the scope of our (medium-term economic) program, we also expect an increase in international direct investments."

Net inflows from direct investments came in at $856 million in April, the data showed. Portfolio investments recorded a net inflow of approximately $2 billion. Official reserves decreased by $2.4 billion.

Economists expect the current account deficit to continue to improve this year as monetary and fiscal policies remain tight.

In September, the government forecasted a deficit of $34.7 billion in 2024, but Treasury and Finance Minister Mehmet Şimşek earlier said the gap would be well lower than projections.

On Monday, he said the shortfall would be in the range of $24 billion-$27 billion for the rest of the year.

The median forecast in the Reuters poll for the 2024 full-year deficit was $28 billion, with estimates ranging between $20 billion and $39.9 billion.

Bürümcekçi said they expect the gap to narrow to around $25 billion.

Since June last year, the central bank has gradually hiked its policy interest rate to 50% from 8.5% and pledged to fight inflation. The government has introduced tax and fee hikes to boost its budget income.

Türkiye also introduced measures to cap strong domestic demand, one of the main reasons for higher imports, and to boost investments and exports to improve the current account balance.