Turkey's current account balance continued to improve in November, reflects lower oil prices

Turkey's current-account deficit continued to narrow y/y in Nov 2015, extending the trend which has been remained intact for over a year now. The improvement largely reflects lower oil and raw material prices. 

Net of energy and gold imports, Turkey's current-account balance has remained around neutral in recent years, showing that all the improvement has come from lower energy import cost. The trend highlights the beneficial impact which lower energy prices are having on Turkey in particular. 

This current-account behavior, by itself, would have been a significant positive for the lira. But in today's broader EM environment, it does not carry much significance and has become a secondary factor. This was confirmed again by the capital account data yesterday, which showed a hefty $3bn net portfolio outflow in November.

"GDP growth has accelerated sharply over the past couple of quarters, and it now appears likely that the country grew by about 4% in 2015, 1pp faster than our earlier estimate; this implies that the 2015 current-account deficit was closer to 4% of GDP as opposed to the 5% we had earlier estimated," notes Commerzbank in a note to its clients.