Y.F. Macro Focus: CA gave deficit again after 3-month long surpluses

In November , the CA posted a monthly deficit of USD2.7bn (Consensus: USD -2.2bn, YF: USD -2.9bn). This was the first monthly deficit after 3 months of surpluses. CA posted a USD3.5bn of deficit in the same month of the previous year. The main drivers of a USD866mn of YoY improvement in the current account were USD794mn of rise on the net service revenues (USD+1.9bn) and USD385mn of lower foreign trade deficit (USD -3.5bn) compared to same month of the previous year. On the other hand, total net primary and secondary deficit increased by USD 313mn and balanced off the improvement in the foreign trade deficit. Net gold imports continued to give surplus for the second month in a row by USD +599mn (Nov.20: USD-2.5bn). However, net energy deficit increased by USD3.5bn YoY to USD5.7bn. Accordingly, core figures (excluding gold and energy) indicated a USD2.4bn of surplus (Nov.20: USD+1.1bn). Therefore, 12-month CA deficit decreased from USD15.1bn to USD14.3bn whereas 12-month core surplus increased from USD26.7bn to USD28bn.

Net error-omission was the key financing item in November, again. FDI recorded a net inflow of USD359mn whereas portfolio investments recorded a net outflow of USD1.4bn. Non-residents were net buyers in equity by USD938mn whereas net sellers in GDDS markets by USD17mn, respectively. Regarding the bond issues in international capital markets, government and real sector realized net repayments of USD1.4bn and USD 452mn, respectively. Other investments recorded a net inflow of USD2.1bn. Banks’ currency and deposits within their foreign correspondent banks decreased by USD1.2bn and nonresident banks’ deposits held within domestic banks increased by USD885mn. Regarding the loans provided from abroad banks and government realized net repayments of USD301mn, USD129mn, respectively whereas other sectors realized net borrowing of USD273mn. Net errors-omissions recorded net inflow of USD4.5bn. Official reserves increased by USD2.8bn. We should also note that the sharp monthly drop in the debt turnover ratio (includes bonds) of the real sector deserved attention in November when the USDTRY currency exceeded level of 10 for the first time and lost around 39% in monthly basis.

Leading figures indicate CA deficit increased in December. In 11M21, CA deficit was USD10.8bn (11M20: USD-32.1bn). According to a YoY comparison on 11-month figures, foreign trade deficit narrowed by USD10.5bn to USD24bn whereas net service revenues increased by USD12.5bn to USD23.4bn (net travel revenues increased by USD9.3bn to USD17.9bn). Net gold imports (USD -2.1bn) decreased by USD18.4bn whereas net energy imports (USD -36bn) increased by USD14bn. Hence, the net contribution from the gold and energy imports was USD4.4bn. Core surplus (excl. gold and energy) rose by USD16.9bn to 27.3bn. Strong external demand, normalization in gold imports and the progress in the vaccination program stimulating tourism activities could be seen as the main drivers of the improvement on year-to-date figures. According to leading figures, trade deficit was USD6.6bn in December (Nov.21: USD-5.4bn, Dec.20: -4.6bn). Slowdown on YoY export growth during sharp losses in the Lira currency deserved attention. Additionally, net service revenues could continue to slow in December due to low season and new variant worries. Hence, 12-month CA deficit could increase in December. We should also note the financing structure (low FDI inflow vs high net error-omissions inflow) CA deficit seems unhealthy. According to the current realizations and trends, our annual CA deficit forecast is at USD15.9bn (-2.1% of GDP) for 2021.



Y. F. Securities Research