While the monthly current account deficit was realized slightly below the market expectations of 2.5 billion USD, it seems to have narrowed from the revised level of 4.32 billion USD in August. On an annualized basis, on the current account balance side, as of September, there was an increase from 22.3 billion USD in August to 27.5 billion USD. In the current account balance, due to the deterioration in trade balance and tourism, there was a deficit for the 10th consecutive month.
Within the framework of the increase in the current account deficit compared to last year, we will be well above the levels predicted at the beginning of the year. In September, foreign trade deficit increased by 3.04 billion USD compared to the same period of the previous year and was realized as 3.71 billion USD. The deterioration in the external deficit is mainly due to the increase in imports, while exports are increasing at a more limited rate. In terms of tourism revenues, we decreased by 1.9 billion USD compared to the same period of the previous year and reached 1.6 billion USD.
On the financing side, net inflows from direct investments were realized as 437 million USD in September, while a net outflow of 607 million USD on the portfolio side. While net sales in stocks were 322 million USD, a net purchase of 424 million USD was made in debt instruments. Official reserves declined by 3.63 billion USD, with state banks selling foreign exchange to support TRY in a period of volatile capital flows. It seems that the deterioration on the financing side continues. While the current account balance in January – September 2020 period had a deficit of 27.97 billion USD, it is observed that net error and omissions indicated a net outflow of 10.15 billion USD.
The upward trend in the foreign trade deficit will continue, as the current trends in exports and imports will likely be reflected in the following months. On the financing side, the change in current conditions may have an impact especially on portfolio investments and reserve utilization. The new economy management and future policy and interest decisions by the Central Bank administration will have a determining effect. Portfolio investments of foreigners can also gain a positive trend if the market-friendly messages given after the changes of duty are supported by actions. For this, the Central Bank expectations for an orthodox monetary policy and policy rate hike and a coordinated fiscal policy in economic management in which the balances of growth, interest and inflation are carefully observed have strengthened. The fact that monetary policy steps are direct and operative will reduce or eliminate the need for use of reserves. It will be important for economic institutions to continue normalization steps in a way that complements their policy actions. These steps can reduce the need for reserve utilization by turning the trend in portfolio investments into a positive one, thus increasing the quality of financing.
Kaynak Tera Yatırım
Hibya Haber Ajansı