August Current Account: Same Golden Story

Turkish Economy: August Current Account

Same Golden Story

Turkey recorded a current account deficit of USD 1,2bn in June slightly better than market expectation of USD 1,4bn. 12 month cumulative deficit shrank by USD 170mn to USD 37bn.

Key Take-aways:

  • Strong gold demand drives the deficit wider.
  • 12 month rolling tourism revenues increased to USD 15,9bn, however still at about 2008 level.
  • German exports rose by 3,1% MoM in August, signaling further momentum in Euro Area economy.
  • Expect domestic demand to slow down in fourth quarter while as external demand should contribute positively.

Gold Trade vs. Core Balance

Turkey has imported a total of USD 11,8 bn gold year to date. Net gold balance stands at USD -6,3bn year to date which amounts to about 0,7% of annual GDP. Gold prices averaging about USD 1.250 per ounce last two years could have increased demand from households (Figure 1). Turkish public seems holding a long position for gold.

Excluding gold even higher oil prices did not have a material deteriorating effect on the current account balance. Total energy imports rose to USD 2,9 bn per month. 12 month rolling core trade and services balance is almost flat at USD -0,2 bn (Figure 2).


Our argument hold up that the previous relationship between growth and external deficit has been turning negative. Due to financial stability policies GDP growth is not dependent on current account deficit anymore.

Tourism recoverd some this year. On the back of rapprochement diplomacy number of Russian tourists visiting Turkey has increased significantly. Ruble appreciation played another key role in this dynamic. With RUB/TRY reaching 0,06 level 3,3 mn Russian tourists visited Turkey year to date. However tourism sector runs some excess capacity. Therefore pricing power stands in the hands of the tourists. Which translated in lower tourism revenues compared to visitor numbers. 12 month rolling revenues still stand at about 2008 year levels (Figure 3).

Euro Area Economy & Outlook

In August Germany posted a net export growth of 3,3% MoM. Expectations were at 1,1% for the series which has a mean of 0,4% since 1991 (earliest available in Bloomberg terminal).

Germany ships a significant portion of her products to Euro Area. German exports harbinger that growth will preserve its momentum into fourth quarter of the year in Euro Area. Global indicators also signal favorable trade volumes worldwide. Accordingly we expect external demand to contribute positively in the last quarter of the year (Figure 4).

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