Türkiye’s Current Account Deficit Hits 25-Month High

The Central Bank of the Republic of Türkiye (TCMB) has released its Balance of Payments statistics for February 2026, revealing a deepening deficit and a significant drain on national reserves. The data shows that Türkiye’s current account deficit reached $35.4 billion annually, marking its highest point in over two years.

The primary driver behind this widening gap remains the foreign trade deficit, which reached $7.48 billion in February alone, overshadowing a core current account surplus (excluding gold and energy) of $1.46 billion.

Record Reserve Depletion in February

Perhaps the most alarming figure in the report is the scale of reserve usage. To address the financing imbalance, the Central Bank’s official reserves saw a net decrease of $10.63 billion in a single month. This record-breaking erosion highlights the pressure on the TCMB to defend the currency and finance the gap amidst a period of regional instability.

Economist Analysis: A “Structural Collapse”

Economist İris Cibre argues that the current figures represent more than just a seasonal fluctuation; they point to a structural deterioration in Türkiye’s economic balance. Cibre highlighted four critical red flags:

• Weak Foreign Direct Investment (FDI): FDI has essentially stalled, with a net outflow of $138 million in February. The 12-month total stands at a meager $2.6 billion, suggesting long-term investors are remaining on the sidelines.

• The Burden on Reserves: In the absence of high-quality capital inflows, the responsibility for financing the trade deficit has fallen entirely on Central Bank reserves and short-term loans.

• Hot Money Outflows: Despite a high-interest-rate environment (37%), “hot money” is leaving the country. Cibre notes that the 12-month outflow related to short-term capital reached $24 billion.

• Real Estate Reversal: For the first time in years, the real estate sector is seeing a net outflow. Instead of foreign capital coming in, Turkish residents are increasingly buying property abroad, totaling $225 million in February.

Türkiye’s Current Account Deficit: Outlook for Spring 2026

The forecast for the coming months remains cautious. Analysts expect the deficit to widen further in March and April as the impact of higher energy costs and regional geopolitical risks continues to weigh on the balance of payments.

With the “Net Error and Omissions” (unidentified capital flows) providing a $6.47 billion buffer this month, the reliance on these non-transparent flows remains high. If reserve depletion continues at this pace, the Central Bank may face intense pressure to adjust its monetary policy or find alternative sources of high-volume foreign financing to maintain macroeconomic stability.

Source: TCMB