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Turkey’s current account deficit shrinks, but budget gap widens

Turkey’s chronic current account deficit has fallen to a 16-year low, but this ostensible improvement is hardly the outcome or harbinger of sound economic headway.
A discount sign is seen at a tourist shop at the historical Grand Bazaar, known as the Covered Bazaar, in Istanbul, Turkey, May 23, 2019. REUTERS/Murad Sezer - RC178DDDAD80
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For the first time in a long time, Turkey’s current account has shown a surplus on a monthly basis, bringing the 12-month current account gap to a 16-year low, according to Central Bank data released July 11. With the $151 million surplus in May, the current account deficit — or foreign-currency deficit — shrank to $2.4 billion year-on-year, heralding that a chronic problem of the Turkish economy was at least temporarily curtailed. 

Only three days later, however, fresh economic data showed another problem, a sharp increase in the central government budget deficit. The deficit stood at 78.6 billion Turkish liras ($13.8 billion) in the first half of the year, widening nearly 72% from 46 billion liras in the same period last year.

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