(Bloomberg) — Turkey posted its highest current-account surplus in five years in August, buoyed by a surge in tourism that helped offset the country’s trade gap.
The broadest measure of trade and investment flows with the outside world had a surplus of $4.3 billion in August, compared with a revised surplus of $778 million the previous month, central bank data showed on Friday. Economists surveyed by Bloomberg were expecting a surplus of $4.2 billion.
The main driver was a net services surplus of $8.7 billion. The goods deficit stood at $2.9 billion.
The sharp improvement in the current-account data shows how restrictive monetary policy is helping drive down demand for foreign goods through high borrowing costs and limiting credit growth at home. Gold imports — previously a major contributor to deficits as Turks sought refuge from inflation — have also declined this year.
The tight policies have so far had “limited” impact on consumer good imports, Istanbul-based economist Haluk Burumcekci wrote in a note. “The overall slowdown in imports is mostly through a fall in intermediate goods and capital goods imports,” he said.
In August, the lira was among the worst-performing emerging market currencies tracked by Bloomberg, driven by a global market rout and rising demand for dollars among locals – highlighting fragile confidence in the currency despite policies aimed at encouraging local-currency savings.
Foreign-currency demand was reflected in reserves data for August, with a decline of $2.5 billion following three consecutive months of growth. Net errors and omissions, or money of unknown origin, recorded outflows of $3.7 billion.
“For a more sustainable course in the current-account deficit, domestic demand-driven growth needs to be also offset by fiscal measures on spending, in addition to monetary and macroprudential policies,” Burumcekci said.
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