WILL CURRENT ACCOUNT DEFICIT LEAD TO ECONOMICS CRISIS
WILL CURRENT ACCOUNT DEFICIT LEAD TO ECONOMICS CRISIS ?
Before two decades world economy faced structural changes this development brought new economic developments and scientific arguments. In 1980s Turkey changed structure of economy, this structure is called “ Free Market Economy” and economic growth established on the rise of export in domestic market.
However in the recent years Turkish economy faced economic crisis because of current account deficits. This year the amount of current account deficit reached to the record level (43 Billion $) and lead to arguments current account deficit may cause economic crise again.
|2005 FOREIGN TRADE VALUES |
|Billion $ |
| |YEARLY |
| |2000 |2001 |2002 |2003 |2004 |2005 |
|EXPORT |27.775 |31.334 |36.059 |47.253 |63.167 |73.275 |
|IMPORT |54.503 |41.399 |51.554 |69.340 |97.540 |116.352 |
|SUM OF FOREIGN TRADE |82.278 |72.733 |87.613 |116.593 |160.707 |189.627 |
|CURRENT ACCOUNT DEFICIT |-26.728 |-10.065 |-15.495 |-22.087 |-34.373 |-43.076 |
|CURRENT ACCOUNT DEFICIT /GDP |13,36% |6,91% |8,57% |9,23% |11,48% |11,94% |
|EXPORT/ IMPORT |51,0 |75,7 |69,9 |68,1 |64,8 |63,0 |
|EXPORT / GDP |13,9 |21,5 |19,9 |19,8 |21,1 |20,3 |
|IMPORT / GDP |27,3 |28,4 |28,5 |29,0 |32,6 |32,2 |
Reference: Turkish Central Bank
In the above current account deficit prolonged to past years, Turkish economy faced economic crise in 2001 the amount of current account deficit was 26,73 billion $ on the other hand the amount of current account deficit reached to 43,08 billion $, however ratio of current account deficit / gross domestic product is a crucial ratio of evaluating the risk analysis, this ratio is 13,36 % in 2001, 11,94% in 2005 and also dividing export of import ratio is % 51 in 2001, %63 in 2005. This ratios means that there is not a kind of risk as much as in 2001.
|IMPORT |2000 |2001 |2002 |2003 |2004 |2005 |
|Investment Goods |11.379,73 |6.954,00 |8.400,00 |11.325,91 |17.397,44 |20.299,82 |
|Intermadiate Goods |35.994,99 |30.286,39 |37.655,81 |49.735,31 |67.549,44 |81.542,33 |
|Consumption Goods |6.928,48 |3.813,68 |4.897,83 |7.813,07 |12.100,28 |13.943,55 |
|Others |199,45 |345,00 |600,00 |465,70 |492,61 |565,87 |
|Total |54.502,65 |41.399,07 |51.553,64 |69.339,99 |97.539,77 |116.351,57 |
Reference: Ministiry of Foreign Trede
As a result of the issue current account deficit does not carry crucial riskness right now, there exist structral risk, it is hidden in the composition of import. The percantage of intermadiate goods in the import is approximately %71. This is a stuctural riskness because domestic output rely uopon the import if there exisit a fluctutaion in exchange rate domestic output and the level of employment may decrease, this might cause serious problems in the economy.
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