Turkey will release data on its trade balance today.
Turkey’s current account is expected to document a $1.7 billion deficit in November, mainly because of a decline in tourism. Despite brief periods of surplus in September and October, the full-year deficit was seen at $45 billion by the end of 2023. Turkish inflation hit a peak of 85.5% in October 2022 and the Turkish lira experienced a stark deterioration, which increased the cost of imports.
Though the Turkish central bank had historically stuck to a controversial monetary policy of lowering interest-rates—a policy led by President Recep Tayyip Erdogan—it changed its course of action in June 2023. The central bank hiked its policy rate to 42.5% from 8.5% and committed to fight inflation, while the government introduced tax and fee hikes to boost its budget income. It also launched measures to cap strong domestic demand, one of the main causes of higher imports, and to boost investments and exports to guarantee improvement in current account balance.
Ankara predicts that this year will see a deficit of $42.5 billion by the end of this year, a slight improvement from last year driven by lower energy prices and aggressive monetary policies.
Madeline McQuillan is an Analyst for Foreign Brief and a contributor to the Daily Brief. Her expertise is in European politics and transatlantic relations. She holds a Master of Science in European and International Public Policy from the London School of Economics.