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Cheap oil will not bridge Turkey's external gap

Monday, February 29, 2016

Subject

Turkey's external balances in 2016.

Significance

In 2015, Turkey's current account deficit fell to its lowest level since 2009. The positive impact of low global oil prices on import costs more than offset problems in such export markets as Russia and Iraq. However, the economy barely attracted enough capital inflows to finance even the reduced current account deficit.

Impacts

  • Volatile financial and currency markets are likely to be highly sensitive to US monetary policy signals and other risk factors.
  • Businesses will find it difficult to predict exchange rates and the level of demand for goods and services, even in the short term.
  • While the government is planning for higher growth, fiscal and monetary policy must target stability too.
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