Turkey’s current account deficit (CAD) jumped 191% in June, compared to the same month last year, according to Tera Yatirim Chief Economist Enver Erkan. The hike stemmed from the increasing cost of energy imports and he also emphasized the adverse impact of the Russia-Ukraine war on Turkey. The CAD was USD 1.2bn in June 2021. In the meantime, the 12-month rolling deficit rose from USD 30.4bn to USD 32.7bn in June, as compared to May. The figure indicates a 2.5-fold jump.
As Erkan says, deterioration continues in financial accounts this year. The financial account usage totaled USD 13.8bn compared to a USD 13.4bn CAD in the first half of 2021 (H1). But the finance account only met USD 2.6bn of the 32.4bn CAD in H1 2022. The finance of the remaining USD 29.8bn was shouldered by net errors and omissions and the Central Bank reserves. The Central Bank’s reserves hover around negative USD 50bn excluding swap transactions. “This situation increases finance risks and problems and makes it difficult to meet the increasing FX deficit,” Erkan added.
In the meantime, Treasury and Finance Minister stated at the 13th Ambassadors Conference in Ankara that Turkey continues to post a current account surplus excluding energy cost. “Turkey’s current account balance posted a USD 8.1bn surplus in January-June and USD 35bn surplus on an annual basis excluding energy. We’ll see a better figure in terms of the current account balance,” Nureddin Nebati said. He also added that tourism revenue is estimated to exceed USD 37bn this year and preliminary indicators point out the continuation of strong growth.
Turkey’s benchmark stock index rallied to a new all-time high of 2,868.44 points at yesterday’s close, up 1.37% daily. After starting the day at 2,860.53. points, Borsa Istanbul’s BIST 100 index gained 38.86 points from Wednesday’s record-high close of 2,829.58 points. During the day, the index’s lowest value was 2,834.61, while its daily high was 2,877.60. The total market value of the BIST 100 was around TRY 2.3tr by close, with a daily trading volume of TRY 42.2bn. The expectation of the Federal Reserve to ease its ‘hawkish’ monetary policies after the Producer Price Index, which rose annually by 9.8%, remained below expectations in the U.S. This has bettered the equity markets, according to analysts. They also say that sector- and equity-based differentiation is continuing following the financial statements of companies on the index. They estimate that 2,850 points and 2,820 points will be the support levels and 2,900 points will be the resistance level for the BIST 100 index, in technical terms.
On the foreign policy side, Turkey, Sweden, and Finland are set to convene on August 26 for the first meeting of the joint mechanism formed under the trilateral memorandum from earlier this summer, according to Foreign Minister Mevlut Cavusoglu. Cavusoglu stated at the 13th Ambassadors Conference that Sweden and Finland are yet to deliver their commitments arising from the trilateral memorandum signed at the NATO summit in Madrid in June and that they haven’t taken any solid steps on Turkey’s requests for extradition of terrorists. He also described remarks by Swedish and Finnish authorities on their promises as well-intentioned and reiterated Turkey’s desire to see concrete steps from the two countries.
DAILY AGENDA
The industrial production index soared 8.5% in June, year-over-year, according to the Turkish Statistical Institute (TurkStat). The index rose by 1.3% on a monthly basis.
Retail sales volume increased by 5.5% in June, compared to the same month last year, according to TurkStat. It dropped by 0.7% monthly. Retail turnover jumped 119.1% in June, year-over-year. It also rose by 8.4% on a monthly basis.
The total turnover index soared 129.8% in June, compared to the same month of the previous year, according to TurkStat. The index climbed by 7.5% in June, month-over-month.
Meanwhile…
>> Foreign investors’ net equity, government debt securities, and corporate bond acquisitions totaled USD 88m, USD 6.8m, and USD 300,000, respectively, in the week ending on August 5, according to the Central Bank.
>> Residents’ FX deposit accounts amounted to USD 3.76bn in the week ending on August 5, according to parity-adjusted data from the Central Bank.
>> The Central Bank’s international net reserves surged by USD 2.69bn to USD 11.81bn in the week ending on August 5, compared to the previous week. The bank’s total reserves climbed by 7.28% from USD 101.3bn to USD 108.76bn in the same period.
>> The net profit of Sabanci Holding’s composites subsidiary, Kordsa, totaled TRY 892m in the first half of the year (H1). The company’s turnover amounted to TRY 8.8bn in this period.
>> The amount of funds collected by Kuveyt Turk rose by 30% to TRY 276bn in H1, compared to the end of 2021. The bank’s net profit totaled TRY 5.8bn in the same period.
