Turkey’s current-account deficit saw a significant improvement in August due to a surge in tourism, resulting in a surplus in the country’s services sector. The data from the Turkish central bank revealed that the deficit amounted to $619 million, a significant decrease compared to the $5.53 billion registered in the previous month.
Tourism Boosts the Current Account
One of the key factors behind the improved current-account deficit was the substantial contribution of $5.75 billion from travel income. The central bank attributed this boost to the thriving summer tourism season. As a result, Turkey’s services sector achieved a surplus of $7.23 billion, surpassing the slightly over $5 billion recorded in July.
Persistent Trade Imbalance
However, despite these positive developments, Turkey’s deficit on goods trade remains high, standing at over $7 billion. This persistent trade imbalance has been exacerbated by the weak Turkish lira, which has led to increased import prices in recent years. Consequently, inflation within the country has surged, reaching 61.5% in September.
Efforts to Stabilize the Economy
In an attempt to halt the lira’s decline, the central bank has implemented rate hikes in recent months. Nevertheless, the inflation rate continues to rise, posing further challenges for Turkey’s economic stability. Over the past two years, Turkey has only managed to achieve a surplus in its current account once, which occurred in June.