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.
- 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).
Disclaimer: This report has been prepared by T.C. Ziraat Bankası A.Ş. economists by using the information from publicly available sources believed to be reliable, solely for information purposes; and they are not intended to be construed as an offer or solicitation for the purchase or sale of any financial instrument or the provision of an offer to provide investment services. The views, opinions and analyses expressed do not represent the official standing of T.C. Ziraat Bankası A.Ş. and are personal views and opinions of the economists who prepare the report. No representation or warranty, express or implied, is made as to the accuracy or completeness of the information contained in this report. All information contained in this report is subject to change without notice, T.C. Ziraat Bankası A.Ş, accepts no liability whatsoever for any direct or consequential loss arising from any use of this report or its contents.