Turkey: Current account deficit plunges in August

Turkey's current account deficit narrowed to minus 163 million in August, down from minus $3.15 billion in July, the Central Bank of the Republic of Turkey reported on Wednesday.

It was the first time Turkey has registered a near-zero monthly current account deficit since 2009. It was a decrease of over $2 billion from July, the report said.

The 12-month rolling current account deficit was minus $43 million. In 2014, Turkey's current account deficit was $45.84 billion.

"None of this should be a surprise," commented Bora Tamer Yilmaz, an economist with Ziraat Securities, who had forecast a zero deficit for the month of August. "Declining commodity and energy prices, as well as an improved import-to-export ratio all contributed to the narrowed deficit."

The deficit in goods item narrowed to $3.6 million, down by $2.6 million from August of the previous year. The deficit in services indicated a net surplus of $3.9 million, narrowing by $583 million compared to the same month in the previous year.

But investment income indicated a net outflow of $497 million, decreasing by $72 million in comparison with August 2014.

"The improvement in current account shall not be limited to the month of August. We expect further improvements in coming years on the back of the central bank's macro-prudential policies," Yilmaz added. The central bank's macro-prudential policies are controls on business and consumer credit.

The devaluation of the Turkish lira with respect to the dollar and the euro has reduced imports purchases by consumers, Yilmaz noted. 

Analysts expect the current account deficit to shrink to 5 percent of GDP this year, down from 5.8 percent at the end of 2014.