Turkey posts higher-than-expected current account deficit in August

Data from the Central Bank of the Republic of Turkey showed Wednesday that Turkey's current account deficit fell less-than-expected in August. Turkey's current account deficit in August fell to $1.77 billion from $2.65 billion in July. Economists had forecast the deficit to fall to $1.4 billion.

The shortfall on trade in goods decreased to $3.53 billion from $3.74 billion in the prior month. The total trade deficit fell to $982 million from $2.11 billion. The capital account showed a shortfall of $3 million compared to -$11 million posted in July. At the same time, the financial account registered a $3.47 billion deficit compared to $1.19 billion surplus seen in the previous month.

Turkey’s government is seeking to overcome an economic downturn by investing more and expanding budget deficits. As public budget deficits widen, so will Turkey’s current-account deficit. The ratio of the shortfall to GDP is seen at 4.3 percent in 2016 and 4.2 percent next year, compared with previous forecasts of 3.9 percent and 3.7 percent.

Prime Minister Binali Yildirim lowered Turkey's growth forecast for this year and next. Gross domestic product is seen growing 3.2 percent for 2016 and 4.4 percent for 2017, down from earlier forecasts of 4.5 percent and 5 percent. Turkey's inflation is expected to be 7.5 percent at the end of the year, unchanged from the central bank’s forecast in July.