Current account deficit still a pinch for Turkey
Turkey's Central Bank (TCMB) disclosed that the country's current account balance reports $22.9 billion deficit in 2005, up 46.4 percent from a year earlier. Current account deficit accounted for 6.4 percent of the gross national product (GNP), which is projected to be $358 billion for 2005. In 2004, current account deficit made up 5.16 percent of GNP. A major contributing factor to the current account deficit was once again Turkey's widening trade gap. The trade balance in 2005 reported a deficit of $42.93 billion. The crude oil import, which was the most important trigger of import increase last year, rose 42 percent to $8.65 billion. Turkish government expect current account deficit to amount $22 billion in 2006, accounting for 5.77 percent of GNP. Turkey's Finance Minister Kemal Unakitan said that “In a time that energy bill is gradually surging, the cost of energy increases as we import energy from abroad. We have to solve the trade deficit and current account deficit”. Unakitan also stressed that the government will not give up the fluctuating exchange rate as the exporters demanded. He said “We consider making a structural change in export sector. We never consider interfering to the exchange rate, with the exception of TCMB. Following the current account report, international investor bank Deutsche Bank indicated that Turkey's account deficit is considerably high, but this deficit will not create concern in 2006 due to the foreign capital inputs, company consolidations and privatizations. Deutsche Bank also suggested Turkey to pay attention to higher outside financing requirements. In addition, the bank also expressed that if the global liquidity develops against the Turkey, this situation may put pressure on TRY and impacted the current account deficit negatively.