Turkey’s Current Account Surplus Exceeds Market Expectations in July

Turkey’s current account balance delivered a positive surprise in July, posting a surplus that outpaced market forecasts. According to figures released by the Central Bank of the Republic of Turkey (CBRT), the country recorded a $1.766 billion surplus for the month. Analysts surveyed by ForInvest News had projected a surplus of around $1.5 billion, meaning the actual outcome surpassed expectations.

When stripping out the impact of gold and energy, the core current account surplus reached an impressive $6.029 billion, reflecting robust service revenues and stronger inflows from transportation and tourism.

Trade Balance and Annualized Deficit

On the trade side, the balance of payments-defined trade deficit came in at $4.635 billion in July. Annualized figures showed that the current account deficit narrowed to about $18.8 billion, while the balance of payments-defined trade deficit stood at $62.7 billion.

The services sector continued to act as a counterweight. In the same period, the services balance posted a surplus of $62 billion, while the primary income balance registered a $17.7 billion deficit and the secondary income balance showed a smaller $380 million deficit. These components underline the critical role of services—especially travel and transport—in offsetting goods-related deficits.

Revisions to Services Balance Data

The CBRT also incorporated updates from the Turkish Statistical Institute (TurkStat), which published its “International Trade in Services Statistics, 2024” on September 9, 2025. Based on this new dataset, the services balance figures were revised for 2023, 2024, and the first half of 2025.

• The revisions reduced net services income by $1.592 billion in 2023 and $623 million in 2024.

• However, for the January–June 2025 period, revisions had a positive impact of $154 million.

In July 2025, net inflows from services amounted to $8.024 billion, driven largely by transportation ($2.417 billion) and travel-related revenues ($6.209 billion). These categories once again underscored Turkey’s reliance on its tourism sector for balancing external accounts.

Financing the Current Account Deficit

Financing dynamics reveal a mixed picture. The annualized $18.8 billion current account deficit in July was primarily financed through direct investments, loans, trade credits, and deposits:

• Net direct investments contributed $5.2 billion.

• Loans accounted for $23.2 billion.

• Trade credits added $3.7 billion.

• Net currency and deposits contributed $100 million.

On the other hand, net portfolio investments subtracted $1.4 billion, highlighting the sensitivity of capital markets to global financial conditions. Meanwhile, the CBRT’s net foreign exchange reserves declined by $7.1 billion, signaling continued pressure on official reserves.

Direct Investment Flows

Foreign direct investment (FDI) activity remained positive in July. Net FDI inflows reached $1.224 billion for the month. Within this figure, foreign investors increased their holdings in Turkey by $2.026 billion, while Turkish residents invested $802 million abroad.

Real estate activity was also noteworthy:

• Turkish residents acquired $253 million in real estate abroad.

• Foreign residents, meanwhile, purchased $358 million worth of property in Turkey, reflecting ongoing international interest in Turkey’s real estate sector.

Portfolio Investments

Portfolio investments painted a more complex picture. In July, Turkey saw net portfolio inflows totaling $5.097 billion.

Breaking it down:

• Foreign investors purchased $859 million in Turkish equities.

• In the government debt securities (DİBS) market, inflows totaled $1.992 billion.

• Foreign investors also bought $891 million in bank-issued bonds and $2.399 billion in government-issued bonds abroad.

• However, they sold $34 million of securities from other sectors.

These figures highlight selective investor confidence, with stronger appetite for government debt and equities compared to riskier sectors.

Loans and Credit Activity

Loan-related flows reflected varying sectoral dynamics:

• Banks repaid $4 million in external loans.

• The general government secured $527 million in net external borrowing.

• Other private sector industries utilized $1.361 billion in net foreign loans.

This breakdown suggests that while banks remained cautious, the government and non-bank private sector relied on external credit lines to support financing needs.

Deposits and Other Investments

Under the category of “other investments,” deposits showed significant growth. Foreign banks’ deposits within Turkey increased by $2.569 billion, split between:

• $2.127 billion in Turkish lira deposits, and

• $442 million in foreign currency deposits.

This increase indicates that foreign banking institutions are maintaining confidence in Turkey’s local currency environment while diversifying with foreign currency holdings.

Surge in Official Reserves

Perhaps the most striking figure came from official reserves, which recorded a net increase of $18.597 billion in July. This rise reflects both reserve management operations and external inflows, serving as a crucial buffer against potential external shocks.

Such a sharp rise in reserves could help stabilize market confidence, even as net FX reserves declined earlier in the year. It also demonstrates the Central Bank’s active role in maintaining external resilience.

A Balanced but Complex Picture

Turkey’s July current account figures tell a story of resilience mixed with structural challenges. On one hand, the current account surplus exceeded market forecasts, tourism revenues surged, and official reserves rose substantially. On the other, the country continues to grapple with a large trade deficit and pressures on net foreign reserves.

The inflows from FDI, portfolio investments, and loans highlight continued international engagement with Turkey’s economy, while the outflows in some categories underscore ongoing vulnerabilities.

The revisions to the services balance further emphasize the importance of accurate data in shaping policy and investor expectations. As Turkey aims for sustainable growth, the interplay between tourism-driven revenues, external financing flows, and reserve management will remain central to its economic outlook.