Turkey's current account deficit to remain at a manageable level, according to Şimşek
In a series of announcements, Turkey's economic outlook for the remainder of the year has been outlined, with the current account deficit expected to increase slightly but remain within a sustainable range.
According to the government's medium-term program, the current account deficit is projected to be 2% of GDP at the end of 2025. This slight widening is mainly driven by strong domestic demand leading to high import volumes, particularly consumer goods, which outweigh export performance that has seen slight declines or modest growth.
The industrial sector continues to show strength, with Turkey's industrial production expanding for three consecutive quarters as of the April-June period. The data showed that Türkiye's industrial output expanded by 8.3% on a yearly basis in June, marking the fastest growth since the data available. This growth is a significant improvement from the 11.2% surge recorded in February 2024.
However, the monthly expansion was slower, with overall industrial production expanding 0.7% in June, a decrease from the 3.2% rebound in the previous month.
Mehmet Şimşek, the Treasury and Finance Minister, anticipates that decreasing global uncertainties and improving domestic financial conditions will contribute to economic activity in the coming period. He also expects the current account deficit to be 1.3% of GDP in the second quarter.
Resilient household consumption is a key factor contributing to this trend. Despite high interest rates and inflation, domestic demand and consumer spending remain strong, causing import volumes to accelerate by about 7.9% year-on-year in June 2025. Export performance, on the other hand, has not kept pace, with calendar-adjusted exports falling by 1.1% year-on-year in June 2025.
The rising euro/dollar parity supports the current account balance by potentially aiding export competitiveness and tourism income. However, financial conditions and capital flows have been volatile, with net outflows in June draining foreign exchange reserves by $4.1 billion.
Inflation has been easing gradually, and the government has taken measures such as increasing wages and pensions above inflation to protect household welfare, which also sustains consumption and import demand.
The current account deficit in May was $750 million, and the annualized deficit stood at $18.9 billion, as reported by the Central Bank of the Republic of Türkiye (CBRT). Despite these figures, the current account deficit is expected to remain at a sustainable level of around 1.5% of national income by the end of the year.
Mehmet Şimşek made his comments about the current account deficit on the social media platform X. He did not provide any specific forecast for the current account deficit beyond the end of the year.
The increasing domestic business demand, driven by resilient household consumption, is leading to high import volumes, which might slightly widen the current account deficit over the year, as projected by the government's medium-term program. In the world of finance and business, Turkey's Treasury and Finance Minister, Mehmet Şimşek, anticipates that improving domestic financial conditions will contribute to a positive economic outlook, including the management of the current account deficit.
