Posted by meb at April 11th, 2011
Turkeyâ€™s current-account deficit more than doubled in February over a year earlier, the 14th consecutive widening in a measure the Central Bank says it is trying to contain.
The deficit rose from $2.7 billion to $6.1 billion in the same month of 2010, the Central Bank in Ankara said Monday on its website. The median forecast in a Bloomberg survey of nine economists was for a gap of $6.3 billion.
The cumulative deficit for the 12 months through February was $54.8 billion, or about 7 percent of estimated gross domestic product. The governmentâ€™s medium-term plans forecast a gap of $42.2 billion, or 5.4 percent of GDP.
Restraining the current-account gap is the bankâ€™s main policy priority, Erdem BaÅŸÃ§Ä±, a deputy governor of the Central Bank, said March 29. The bank has cut interest rates by 75 basis points since December to help slow capital inflows, while increasing reserve requirements to cap growth in loans. It had forecast that those increases would take effect in the current quarter of the year.
Net foreign direct investment was $497 million in February, bringing the total for the year to $1 billion, compared with $973 million in the same period of 2010, the bank said. Foreign investors bought a net $1.8 billion in Turkish government bonds in February and sold $554 million in shares, it said.
Exports rose 22 percent in February to $10.1 billion, while imports surged 49 percent to $17.5 billion, the statistics office said March 31.
The bank recorded $3.3 billion in inflows in the net errors and omissions section of Mondayâ€™s data release.
Call for conscious
Commenting on the recent figures, RÄ±zanur Meral, chairman of the Confederation of Businessmen and Industrialists of Turkey, or TUSKON, told Anatolia news agency that the rise of the current account deficit could not be prevented through bureaucratic cautions and laws.
â€œAll of society should be more conscious about the situation,â€ said Meral.
TanÄ±l KÃ¼Ã§Ã¼k, chairman of Istanbul Chamber of Commerce, or ICOC, told Anatolia that Turkey had to reconsider its growth model. KÃ¼Ã§Ã¼k said the country was likely to exceed the estimated total volume of the current account deficit of $42 billion by the end of the year.
â€œWe become one of the top performing countries in growth rate by the end of last year but no other country has had [a larger] account deficit among the top growing economies like us,â€ he said.
â€œThe policy of slowing down the domestic economy by narrowing down the credit volume in order to challenge the high deficit now brings more questions to mind,â€ said Ã‡etin Osman, chairman of Adana Trade Chamber. â€œThe recent figures indicate that most of the domestic demands have been met through increasing imports.â€
Turkish Lira strengthens
The Turkish Lira appreciated for a fifth day against the dollar after the Central Bankâ€™s report reflected an increase in capital inflows.
Turkeyâ€™s currency strengthened 0.2 percent to 1.508 per dollar at 11:23 a.m., heading for its strongest closing in four months.
â€œThe market saw the current-account data positively,â€ Cem TÃ¶zge, fund manager at Ata Yatirim Menkul DeÄŸerler, told Bloomberg. â€œThe figure was very close to expectations but the absence of a negative surprise caused the dollar-lira to go below 1.51. The net errors and omissions show that hot money continues to park in Turkey.â€
Turkeyâ€™s currency has rallied 5.7 percent versus the dollar in the past month, the third-best performance of more than 20 emerging markets tracked by Bloomberg, benefiting from the so-called carry trade, in which investors buy currencies of countries with low rates and invest in the assets of nations with higher yields.
source: hurriyet daily news