Turkish Economy - Current Account

CURRENT ACCOUNT

The declining trend in the annualized current account deficit continued in the final quarter of 2009 and became USD 14 billion. In monthly terms, the year-on-year current account deficit saw the lowest level in October 2009 with USD 12.4 billion and started to expand in the following months.

Due to the global contraction, the ratio of imports covered by exports besides that of the foreign trade deficit covered by tourism revenues displayed a notable improvement in 2009. Meanwhile, the export coverage ratio of short-term external debt stock and foreign debt service decreased in 2009. Although the slowdown in capital inflows restricted reserve accumulation, the contraction in the current account deficit resulted in an increase in indicators based on Central Bank reserves.

As a result, the current account deficit in 2009 was recorded as USD 14 billion, which is 67% lower than the USD 41.9 billion deficit posted in 2008.

Financing of Current Account Deficit

The share of FDI has an important portion in Current Account financing. Approximately 44% of the current account deficit was financed by the foreign direct investments in 2008. The external borrowing of non-bank private sector is also increasing with the aim of financing trade and investment activities.