Forecasts Show Decrease in Current Account Deficit for 2024

Summary

  • An array of 12 economists predict the current account to range from a deficit of $1 to $2 billion.
  • The trade deficit fell 32.6% year-on-year in November to $5.92 billion from an earlier average of around $10 billion.
  • Surpluses of $1.88 billion in September and $186 million in October were recorded due to tourism revenues and a reduced trade deficit.
  • Goldman Sachs notes a drop in the current account due to a decline in tourist visitor numbers and consistent energy imports in November.
  • Projections anticipate that the current account deficit will reduce to 1.8% of GDP in 2024, reflecting domestic demand rebalancing.
  • The overall prediction for the annual deficit is $45 billion, with estimates between $43.5 billion and $45.7 billion.

Economists Forecasts and Trade Deficit Factors

Forecasts from a panel of 12 economists foresee the current account to extend from a deficit of $1 billion to $2 billion. The trade deficit, which forms a chief part of the current account, observed a 32.6% year-on-year decline in November to $5.92 billion, plummeting from formerly average figures circling $10 billion.

Current Account Balance and Economic Predictions

In September and October, the current account balance reported a surplus of $1.88 billion and $186 million, respectively, resulting from tourism income and a constricted trade deficit. Goldman Sachs highlighted in a communication that, despite energy imports remaining roughly constant in November, there was a drop in tourist visitor numbers for seasonal reasons, which constituted most of the decrease in the current account.

Future Projections and Government Measures

Additionally, Goldman Sachs states that “given the considerable deficits in H1, we persist in expecting the aggregate current account deficit to attain 4.1% of GDP in 2023… Anticipating ahead, we predict that the current account deficit will decrease to a lower consensus of 1.8% of GDP in 2024, mirroring the rebalancing in internal demand.” The pooled forecast for the full-year deficit sat at $45 billion, with estimations oscillating between $43.5 billion and $45.7 billion.

As of June, the central bank has escalated its policy rate to 42.5% from 8.5% and has sworn to combat inflation, while the government has applied tax and fee hikes to escalate its budget revenue. Measures have also been initiated to cap robust local demand, which is one of the primary reasons for elevated imports, and to stimulate investments and exports to guarantee progress in the current account balance.

Impact and Remarks

Ankara voiced in September a deficit prediction of $42.5 billion for the current year, descending from the previous year’s $48.8 billion, which was driven mainly by energy and gold. The central bank is slated to unveil November’s current account data at 0700 GMT on January 12.

Such economic developments and forecasts can significantly impact forex trading, particularly related to the currency linked with the above-economic data.

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