Latest figures from the Central Bank of Turkey show the current-account deficit for the country dropped by nearly 50% in June. The deficit for June was $4.25 billion, 45% less than in June 2011. This is down from $5.71 billion in May and $7.72 billion in June last year.
However this figure was slightly higher than a Reuters poll forecast of $4.1 billion. During the first half of the year the shortfall was $31.08 billion which is around a third less than for the same period last year. Turkey is hopeful of seeing further improvements in this deficit, although the falls may be smaller in the coming months due to the overall slowdown in economic activity.
The Turkish finance minister, Mehmet Simsek, feels the economy is experiencing a soft landing and that this gradual slowdown in growth won’t lead to recession. Imports into Turkey declined by 1.7% during the first half of the year, but exports have seen robust growth, mainly helped by the sales of gold to Iran.
According to Simsek, Turkey is also making considerable progress in obtaining investment necessary to finance this deficit. In June direct investment into the country reached $1.78 billion compared to $1.43 billion in May.
The government is expecting the current-account deficit to fall to around 7% of GDP this year compared to 10% last year. The problems faced by Turkey include increased domestic demand which has led to rising inflation. The central bank has introduced a mix of different policies to try to curb inflation through dampening this demand. The Turkish economy is expected to grow by between three and 4% this year compared to 8.5% in 2011.