Turkey’s current account deficit, about $65 billion last year, is the ailing side of the country's economy. Ankara’s middle-term economic program projects the gap downward, to $55.5 billion, by the end of 2014. More optimistic projections see it narrowed even further, below $50 billion. Trying to reduce the gap without reducing dependence on foreign energy supplies would, however, require a complex effort.
The elusive goal of a lower current account deficit requires a reduction in imports and a boom in exports, as happened in gold. While $727 million worth of gold was imported in the first two months of 2013, $413 million worth of gold was exported for the same period this year. It is a figure that helps reduce the current account deficit. Similarly, export items such as textiles and ready-to-wear clothing, which depend little on imports, are major antidotes against the current account deficit. The textile sector produced a current account surplus of $15.2 billion in 2013.
A slowdown in growth can also help reduce the current account deficit. Ankara has set its growth target at 4%, but perhaps the International Monetary Fund's much lower projection of 2.3% will materialize. Can Turkey work an economic miracle and reduce its current account deficit by boosting exports to a record level while keeping the growth rate high through structural measures? One must first look at how things stand at the moment.
Turkey has the largest current account deficit among emerging economies. While Turkey’s current account deficit amounted to 7.8% of gross national product (GNP) at the end of 2013, the same ratio stood at 6.7% for South Africa, 4.3% for India, 3.9% for Chile, 3.5% for Brazil, 3.3% for Indonesia and 2.2% for Poland. The figure represents a great economic peril for Turkey and urgently needs to be reduced.
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