Latest figures for the Turkish economy’s current account deficit (CAD) show it fell by just under 0.5% in January compared to January 2011, and is just below $6 billion. According to statistics from the Central Bank of Turkey, the CAD in January was around $25 million lower year on year.
The CAD is a continuing problem for the Turkish economy, as the country is just about fully dependent on foreign energy imports, but it has become a more pressing problem during the last couple of years.
This is partly because Turkey recovered strongly from the global financial crisis and achieved high growth rates in 2010 and 2011, and partly because of rising energy prices. At the height of the economic crisis in late 2008, energy prices were at historically low levels, but during the past three or four years, the price of a barrel of crude oil has nearly tripled.
However there is better news on the horizon for the CAD, as the economy is projected to grow at around 4% or 5% this year, which is much more sustainable. More importantly this means it’s much easier for the country to finance its growing need for energy without damaging its balance of payments.
This is just as well, as Iran has yet to prove its controversial nuclear programme is only for peaceful purposes, and an escalation in the sanctions imposed by the UN and the US could push up the price of crude. Every time crude oil increases by $10 a barrel, it costs Turkey another $4 billion a year. The government is also taking steps to increase production capacity in the manufacturing, automotive, food and agriculture and textiles and chemicals sectors in its fight against the CAD.