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POLL-Turkey's current account seen recording $1.24 bln surplus in July

Credit: REUTERS/MURAD SEZER

Turkey's current account is expected to have recorded a surplus of $1.24 billion in July, a Reuters poll showed on Wednesday, thanks to tourism income and slow economic activity.

By Ezgi Erkoyun and Ali Kucukgocmen

ISTANBUL, Sept 11 (Reuters) - Turkey's current account is expected to have recorded a surplus of $1.24 billion in July, a Reuters poll showed on Wednesday, thanks to tourism income and slow economic activity.

Turkey's annual current account deficit, which climbed to $58 billion in May 2018, has dropped dramatically in the wake of a currency crisis that saw the lira lose nearly 30% of its value against the dollar last year. It swung to a surplus in June.

The median estimate in the Reuters poll of 12 economists stood at a surplus of $1.24 billion in July, with forecasts ranging between surpluses of $500 million and $1.5 billion.

Last year's large deficit had been a key concern for investors because it leaves the economy reliant on speculative inflow of funds to finance the shortfall.

Economic activity slowed substantially in the wake of the lira crisis, while the cost of imports surged, which reduced the current account deficit.

Jason Tuvey, senior emerging markets economist at Capital Economics, said the improvement in current account is mainly driven by slow economic activity and is supported by tourism income in summer months.

"I suspect the current account may start to deteriorate over the coming months, part of it will be the seasonality effects but the government is doing all it can to support demand, which will lead to higher imports," he said.

The 12-month cumulative current account recorded a surplus of $538 million in June, its first surplus in nearly 17 years, thanks to a boost from tourism income in the peak summer months.

The median estimate for current account deficit for end-2019 stood at $5 billion. Estimates ranged between a deficit of $9 billion and a surplus of $2 billion. Nine economists contributed for end-2019 poll.

In the previous poll, the median estimate stood at $8.25 billion for end-2019. The annual deficit narrowed to $27.8 billion last year from $47.35 billion in 2017.

Turkey's trade deficit narrowed 46.9% year-on-year in July, official data shows.

Turkey's central bank is expected to announce the July current account data at 0700 GMT on Sept. 13.

(Editing by Jonathan Spicer)

((ali.kucukgocmen@thomsonreuters.com , @alikucukgocmen; +902123507067; Reuters Messaging: Reuters Messaging: ali.kucukgocmen.thomsonreuters.com@reuters.net))

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