Turkey's Current Account Deficit and Prospects for Surplus in July and August
Turkey registers a current deficit of $23.09 billion in the initial half of 2025, as per the Central Bank of the Republic (CBRT) data.
In the first half of 2025, Turkey's current account deficit stood at $23.09 billion, with a goods account deficit of $6.5 billion. However, when gold and energy are excluded, the balance showed a surplus of $2.6 billion[1].
Monthly Deficits
The current account deficit widened to $2.01 billion in June 2025, primarily due to a goods trade balance deficit of nearly $6.5 billion. Despite this, the services sector, particularly transportation and travel services, contributed significantly with net inflows of $1.88 billion and $5.02 billion, respectively[1][4]. May 2025 saw a deficit of $0.68 billion, marking the seventh consecutive month of deficit[3].
Projections for July and August
While specific projections for July and August are not detailed, Turkey's Trade Minister Omer Bolat expects the current account to post a surplus in these months[2]. This expectation is based on factors such as strong exports, tourism revenues, and economic growth.
Key Driving Factors
- Exports and Tourism: The services sector, particularly tourism, has been a significant contributor to reducing the deficit. Industrial production expanded by 7.3% year-over-year in the April-June period, indicating robust economic activity that could support trade balances[2].
- Global Economic Conditions: Decreasing global uncertainties and improving domestic financial conditions are expected to enhance economic activity, which could positively impact the current account balance[2].
Potential Challenges
Despite the prospects of surpluses, challenges remain. The persistent deficit in goods trade poses a challenge, with the deficit widening to $6.48 billion in June from $4.14 billion a year earlier[3]. Additionally, the primary income deficit, which includes investment income payments, is another area of concern[3].
Other Notable Figures
- Total goods and services exports rose by 4.3% to $384.7 billion.
- Portfolio investments recorded a net inflow of $1.05 billion, with non-residents purchasing $641 million in equities and $114 million in government domestic debt securities.
- Foreign banks' deposits in Turkey rose by a net $494 million, with a $675 million increase in foreign currency deposits and a $181 million decline in Turkish lira deposits.
- The services balance posted a $62.1 billion surplus over the past 12 months.
- The primary income balance recorded a $17.6 billion deficit in the annualized period, and secondary income posted a $100 million deficit.
- Net inflows from foreign direct investments (FDIs) reached $616 million in June 2025.
Reserve Losses
CBRT's foreign currency reserves fell by $4.05 billion in June, and annualized reserve losses reached $20.34 billion[1].
In conclusion, while there are prospects for a current account surplus in July and August, challenges such as the goods trade deficit and primary income shortfall need to be addressed to achieve sustainable improvements in the current account balance.
- President Erdogan has emphasized the importance of a surplus in the current account, which the Turkish government expects to achieve in July and August according to Trade Minister Omer Bolat, due to factors such as strong exports, tourism revenues, and economic growth.
- If successful, a surplus in the current account could positively impact the Turkish economy, including the finance and business sectors, as it would reduce the drain on foreign currency reserves.
- The Lira, Turkey's national currency, may benefit from a current account surplus as it could help stabilize the currency's value against other global currencies.
- However, addressing the persistent deficit in goods trade and primary income, which includes investment income payments, remains a significant challenge to achieving sustainable improvements in the Turkish current account balance.
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