Turkey's current account deficit persists under COVID-19
The negative impact of the pandemic on tourism and trade was clearly visible in the Turkish Central Bank’s recently announced data, which showed that the current account deficit increased by 4.48 billion dollars compared to November 2019.
K. Murat Yıldız / Duvar English
Turkey's current account rate has been announced via economic data from the Turkish Central Bank. According to the statistics from the bank, the Turkish government's current account imbalance increased by 4.48 billion dollars compared to November 2019 and reached 4.63 billion dollars, while the national debt surpassed 37.97 billion dollars.
Experts pointed out that the reason behind the higher than expected current account imbalance increase to 3.8 billion dollars, via an increase of 2.9 billion dollars compared to the same month in 2019, was the decrease in imports of goods and services from 1.4 million dollars to 555 million dollars.
Government still on spending spree
The decrease in economic activity in general and the loss of at least 30 billion dollars in tourism revenue had an adverse effect on Turkey’s economy. The negative impact of the 2018 and 2019 budget deficits contributed to the Treasury's debt in 2020 as well as the adverse effects of the COVID-19 pandemic on the economy.
Moreover, decreased consumption related to high inflation and exchange rates led to a decrease in tax revenue alongside the effects of the COVID-19 pandemic. While state income is decreasing, the current account balance is shaken by the fact that the government is doing almost nothing to save on its expenditures.
Tourism income dropped
Tourism income compared to the same month of 2019 decreased from 964 million dollars to 583 million dollars due to the impact of the COVID-19 pandemic which caused the decline of income from goods and services.
While the current national bank, excluding gold and energy, had a surplus of 4.1 billion dollars in November 2019, it had only a surplus of 632 million dollars in November 2020, the Central Bank said.
Reserves decreased
Meanwhile, banks, the government, and other sectors continued to pay off external debts. Banks repaid 629 million dollars, the government repaid 35 million dollars, and the rest repaid a total of 191 million dollars of their loans and debts which resulted in a net 145 million dollar decrease in official reserves during the same period.