Turk C/A deficit seen above target
ANKARA (Reuters) – Turkey’s central bank sees the current account deficit at 6.3 percent of gross national product by the end of 2006, but does not expect funding problems, interim governor Erdem Basci said yesterday. Turkey’s current account deficit is seen as one of the weakest points in a strong economy – made worse by a strengthening lira currency and an energy deficit. The government has set a current account deficit target of 5.77 percent of GNP, or $22 billion, for 2006, although some analysts already expect it to be higher. Basci gave the forecast while speaking to reporters after the central bank’s annual meeting. In an earlier presentation he said the deficit did not stem from a fall in national savings but from a rise in private sector investments. The rise in foreign direct investments showed that funding the deficit would not be a serious problem, he added. Francesca Beausang-Hunter, an analyst at 4cast, said she was already expecting an even higher figure. «Given expectations of shrinking tourism revenues and of a worsening trade backdrop, we see potential for the new forecast to be overshot and closer to 7 percent of the GNP,» she said. Official data show the number of tourists visiting Turkey fell 7.4 percent year-on-year in the first two months. The Turkish Tourism Investors’ Association said last week that compared with this time last year European tourism bookings for the summer season May-August had fallen by 40 percent. Turkey’s current account deficit jumped 58.6 percent year-on-year to $5.918 billion in the first two months of 2006. It was $23.09 billion in 2005, or 6.4 percent of GNP. A large oil bill, a drop in the number of foreign tourists and a gaping trade deficit contributed to the rise.
