Energy and gold don’t explain the CAD


First, it’s noteworthy to remark on a revision. The current account deficit (CAD) was USD 9.84bn in January in the first statement, and the figure was the highest monthly deficit in the history of the republic. Now, we see that the CAD is even higher. The revision, which was made while the February data was announced, showed that the CAD reached USD 10.02bn in January. This is also a record…

The current account balance posted a USD 8.8bn deficit in February, and therefore the 2-month deficit reached USD 18.8bn. The 12-month CAD hit USD 55.4bn in February. 

The CAD target was USD 22bn for the entire year…

The foreign trade deficit has been the main reason for CAD in Turkey for years. The main reason for the foreign trade deficit is high imports. Although we take measures on t paper to increase exports and reduce the foreign trade deficit, these measures don’t give a result. 

We generally link the high course of imports with high energy prices. This is right to some extent, as the energy bill has increased too much, especially in the recent period. 

Gold imports, non-monetary gold imports, have been added to the energy burden. Monetary gold shows the gold held by the Central Bank in its reserves. Non-monetary gold shows other imports and exports. 

The main reason for such imports is the demand of citizens. 

There has been a significant hike in net non-monetary gold imports in the recent period. 

For instance, gold imports, which amounted to USD 3.8bn in net terms, totaled USD 4bn in February, versus exports of USD 194m. 

Energy imports hit USD 921m versus exports of USD 6.7bn and net exports of USD 5.8bn. 

The amount of net gold and energy imports totaled USD 9.6bn. If there wasn’t this import, the current account balance would post a USD 834m surplus instead of USD 8.8bn deficit. 

What was the situation in previous months?

Although the non-gold and energy current account surplus totals USD 834m, it is the lowest surplus in the last two years. 

The current account balance posted a USD 613m deficit in May 2021, excluding gold and energy. Although there was always a surplus in the following period, it has never been as low as it was in February 2023.

The current account balance posted a USD 2.4bn surplus excluding gold and energy in January when the CAD record of the history of the Republic was broken. 

The CAD was mainly financed by the Central Bank’s reserves in February.

Financing totaled USD 7.8bn versus the CAD of USD 8.8bn. The net errors and emissions hovered around USD 1bn.

USD 4.7bn of the financing was met by the Central Bank’s reserves in February. The net borrowing totaled USD 2.4bn in February. 

The foreign direct investments and portfolio investments amounted to USD 505 and USD 240m, respectively. 

Contrary to USD 10bn CAD in January, the financing inflow totaled USD 10bn and the Central Bank’s reserves accounted for USD 9.3bn in this amount.

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