Turkey’s current account deficit widens further

Turkey’s current account recorded a deficit of US$7.5bn in February, exceeding both the market consensus and our own forecast of $7.1bn. As a result, the 12‑month rolling current account deficit continued its upward trend, widening to $35.4bn (around 2.4% of GDP) from $33.2bn in the previous month.

A breakdown of the monthly data shows that the deficit widened by around $2.3bn compared to the same month last year. This was largely driven by a wider trade gap, which deteriorated from $‑5.5bn to $‑7.5bn, reflecting both a shift from a core trade surplus in 2025 to a deficit and rising gold imports, despite easing energy costs. The monthly current account also deteriorated further due to a weaker balance in services income.

On the capital account side, inflows lost momentum in February, following the largest monthly figure ever in January, and stood at $3.3bn. With net outflows from errors and omissions of $6.5bn (the largest in the last two years), and considering the current account deficit, official reserves fell by $10.6bn.

Further analysis reveals that non-resident activity led to inflows totalling $3.4bn, primarily from debt-related channels, which contributed $2.2bn. Accordingly, portfolio investments of $2.3bn, trade credits of $1.2bn and net borrowing of $2.2bn are the major items, while a $2.6bn fall in foreign deposits held at local banks and at the central bank limited the total inflows.

In the breakdown of net borrowing, corporates secured $1.5bn, though long-term borrowing of the banking sector roughly offset short-term debt repayments. This translates into long-term debt rollover ratios at 224% for corporations and 109% for banks on a monthly basis, compared to 215% and 160%, respectively, on a 12-month rolling basis.