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Turkey’s current account deficit surges as unemployment drops due to COVID-19 impact

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Turkey’s current account deficit leapt to $4.06 billion in November, central bank data showed on Monday, exceeding a poll forecast of $3.7 billion as the trade gap grew and the economy sought to shake off the effects of the coronavirus pandemic.

The outbreak’s impact was reflected in September-November unemployment data, showing workforce participation down to 50.0 percent and those in employment down nearly 900,000 from a year earlier. The unemployment rate was 12.7 percent, unchanged from a month ago.

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The lira, hit by dollar strength on Monday morning, was 1.7 percent weaker at 7.48 after the data.

The current account deficit, a perennial weak point in the economy, was mainly due to a surge in the trade deficit, which rose $2.9 billion from a year earlier, statistical institute data showed, as well as a $1.45 billion drop in services income.

The foreign trade deficit, a main component of the current account, leapt 153.5 percent year-on-year in November to just above $5 billion according to the general trade system, data from the country’s statistics institute showed.

Exports fell 0.9 percent and imports jumped 15.9 percent year-on-year, the institute said.

Women withdraw cash from an ATM of Halkbank in Istanbul, Turkey. (File photo: Reuters)
Women withdraw cash from an ATM of Halkbank in Istanbul, Turkey. (File photo: Reuters)

The 12-month running cumulative deficit rose to $37.974 billion, the data also showed. In its medium-term program, the government had forecast a deficit of $24.4 billion for 2020.

That program also forecast an unemployment rate of 13.8 percent at the end of this year, but the rate actually fell to 12.7 percent as of September-November, down from 13.4 percent a year earlier, held down by a ban on layoffs amid the coronavirus pandemic.

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However, the rate of participation in the workforce fell to 50.0 percent from 53.0 percent a year earlier and employment decreased 896,000 to 27.4 million, the statistics institute figures showed.

The data also showed the proportion of youth neither employed nor in school was 27.6 percent in October, up from 26 percent a year earlier and edging closer to the youth employment rate of 30.6 percent.
Reflecting the pandemic’s toll on all workers, the number of those too discouraged to seek employment rose to a new record of more than 1.5 million, well over double the year-earlier level.