Turkey’s annual current account deficit narrows sharply
The latest data reveals a significant narrowing of Turkey's current account deficit, a shift attributed to a decrease in domestic demand and reduced gold imports. Per the full note , September's surplus reached $2.7 billion, contributing to a rolling annual deficit of $39.2 billion—approximately 2.4% of GDP. This improvement signals potential resilience in Turkey's economy, particularly amidst ongoing geopolitical tensions impacting energy prices. With limited calendar events ahead, market participants will closely monitor this evolving landscape.
What the desk is arguing
The desk views the sharp narrowing of Turkey's current account deficit as indicative of a stabilizing economic environment. The recent surplus of $2.7 billion in September points toward a resilient trade balance, with gains in core trade surplus counterbalancing a wider energy deficit. This perspective aligns with the findings from the recent report outlining the current account trends and highlights positive signals from reduced gold imports.
The figures demonstrate a clear improvement, with the trade balance shifting from a deficit of $5.4 billion to $3.6 billion over a year, reflecting a 33% reduction in the trade gap. This is supported by an increase in services income, which offsets declines in primary and secondary income balances, thereby strengthening the overall current account position.
Where it sits in our coverage
Our consensus target for USD/TRY is currently pegged at 1.075, with a range of 1.04 to 1.12. The following firms are particularly relevant to our analysis: - JPMorgan: Target 1.10 (Mar26) - BofA: Target 1.04 (Mar26)
This view is somewhat aligned with JPMorgan's more optimistic stance; however, BofA presents a more cautious outlook, emphasizing potential downside risks. Notably, our target sits nearly at the midpoint of the range suggested by these firms, indicating a moderately bullish sentiment in our analysis.
How other firms see it
The majority of firms, including JPMorgan, express confidence in Turkey’s economic recovery, echoing sentiments presented in our desk’s analysis. In contrast, BofA argues for caution given the potential external pressures stemming from rising energy prices and global economic uncertainties.
Key indicators to watch include EUR/USD movements and the overall trajectory of Turkish inflation levels as they may directly influence investor sentiment and positioning in the USD/TRY pair.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Turkey's current account surplus reached $2.7 billion in September, a significant improvement from last year's $0.6 billion.
- 02The annual current account deficit now stands at 2.4% of GDP, down from 41.3 billion last month.
- 03Improvement driven by a reduced trade deficit and increased services income against a backdrop of rising energy prices.
- 04Continued volatility in investment funds may pose risks to the capital account.
Market implications
Focus on the USD/TRY level around 1.075, as traders may position themselves ahead of potential stabilization signals from Turkey's economy. Any shifts in services income or trade balances will be critical to watch, especially in light of ongoing geopolitical tensions.
Risks to this view
The principal risk to this bullish narrative lies in further escalation of energy prices due to geopolitical events, which could exacerbate the trade deficit and undermine tourism revenues. A reintroduction of domestic pressures leading to increased inflation could also reverse current improvements.
Articles Turkey’s annual current account deficit narrows sharply Published 09:58 Turkey Translate Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download September data shows that Turkey's large current account surplus is attributable to a moderation in domestic demand and lower net gold imports. Its capital account, on the other hand, saw outflows amid volatility in investment funds Muhammet Mercan Turkey's surplus widened in September to US$2.7bn, almost in line with consensus. This is versus a mere $0.6bn in the same month last year, narrowing the 12-month rolling current account deficit to $39.2bn – approximately 2.4% of GDP – from $41.3bn a month ago.
A closer look at the monthly figures shows that the growing surplus was primarily due to a lower trade gap, which improved from -$5.4bn to -$3.6bn on the back of a) an increase in core trade surplus and b) gold trade turning positive, despite a deterioration in energy trade balance as the US-Iran war has pushed energy prices up. Higher services income, more than offsetting deterioration in the primary and secondary income balances, also contributed to the current account's rising surplus. Breakdown of the current account (US$bn) Source: CBT, ING "> Source: CBT, ING In the first nine months of 2026, Turkey's current account deficit widened by $8.9bn compared with the same period in 2025, reaching $28.0bn.
The deterioration was driven mainly by a $12.4bn narrowing of the core trade surplus and a $1.9bn widening of the energy deficit, partly offset by a $3.0bn narrowing of the gold deficit and a $3.1bn higher services income. On the capital account side, outflows continued at $13.7bn in September, given the impact of investment fund volatility following the weakness in August. With slight inflows from net errors and omissions of $1.0bn, and considering the current account balance, official reserves depleted by $10.0bn.
Further analysis reveals that resident activity led to outflows totalling $7.0bn, primarily from continuing acquisition of portfolio assets and higher deposits abroad. Non-residents reduced their Turkey exposure by cutting their investments in funds by $5.8bn following the local fund shock and deposits held at local banks by $1.1bn. On the flip side, net borrowing has continued with another $1.7bn increase in September.
In the breakdown of net borrowing, corporates secured higher long-term financing, while banks were net payers both in the short and long term. This translates into long-term debt rollover ratios at 240% for corporations and 88% for banks on a monthly basis, compared to 216% and 144%, respectively, on a 12-month rolling basis. On the corporate side, an acceleration in rollover rates since mid-2025 towards 200% levels and above is attracting attention.
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