Turkey’s current account deficit rose 164 per cent on the year to $7.753 billion in May, slightly below forecasts but offering little relief to markets anxious about Turkey’s mounting exposure to external shocks.
In the first five months the shortfall widened to $37.274 billion from $16.839 billion a year earlier, central bank data showed on Monday. May’s current account deficit was forecast at $7.9 billion according to a Reuters poll of 15 analysts.
“The deterioration in the current account deficit continues at full speed and the financing quality continues to worsen,” said economist Ozgur Altug at BGC Partners, noting the 12-month rolling deficit was equal to 9 per cent of GDP.
“The financing of the current account deficit is not promising in 2011 compared to the last six years” portfolio inflows along with the net errors and omissions item continue to finance more than 60 per cent of the deficit, which makes the country more prone to sudden stops,” he continued.
The deficit, which last year stood at 6.7 per cent of GDP, is cited as the key risk to Turkey’s economic outlook. So long as investors are prepared to lend to Turkey the country can run a deficit.
From / Gulf Today