Turkey faces power shortages as gas contracts end

2021 ◽  
Keyword(s):  
Current Account ◽  
Current Account Deficit ◽  
Content Type ◽  
Run Up ◽  
Power Shortages

Significance Turkey stands to lose 21% of its import portfolio during the peak winter demand period. Take-or-pay gas import contracts signed two decades ago are coming to an end, and renewal is proving far from straightforward as exporters seek to leverage Turkey’s weak position to secure favourable terms. Impacts Cheaper gas on better terms would help Turkey’s chronic current account deficit. Ankara is keen to avoid further confrontation with Washington in case it puts further pressure on the lira in the run-up to elections. Balancing relations with Washington and Moscow and securing cheap, reliable gas supplies would be a major feat but may prove impossible.

Are export earnings from India’s bilateral intra-industry trade with the US and China robust enough?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sagnik Bagchi ◽  
Surajit Bhattacharyya
Keyword(s):  
Current Account ◽  
Manufacturing Industry ◽  
Current Account Deficit ◽  
Export Price ◽  
World Market ◽  
Export Share ◽  
Content Type ◽  
Persistent Problem ◽  
Industry Trade ◽  
The World

Purpose This paper aims to explore whether India’s export basket in the bilateral intra-industry trade (IIT) with two of its top trading partners characterize robust export earnings or not. This is pertinent for two reasons. First, India has a persistent problem of current account deficit for over decades now. Second, whether India’s export diversification strategy by participating in global value chains to improve export share in the world market led to the problem of the fallacy of composition. Design/methodology/approach This study considers bilateral trade data between India-USA and India-China at the HS-6 digit level over the period 1990–2018. The magnitude of total IIT is computed using the Grubel and Lloyd (1971) index. This paper then uses the unit value dispersion criterion to disentangle the magnitude of total IIT into horizontal and vertical IIT. Through a stepwise econometric exercise, this paper explores the attributes of exported goods in the IIT basket in terms of the directions of ToT, export share and export-price elasticity. Findings Across the two country pairs, the major contributors to the upsurge in IIT are five manufacturing industry groups of chemical, plastics and rubber, textiles, base metals and machinery and mechanical appliances. Across the industry groups, the dominant form of IIT has been low vertical IIT. Most of the industry groups do not characterize robust export earnings as the commodity groups have an elastic demand and an increasing trend of Terms of Trade (ToT). The exceptions are the industry groups of chemicals and textiles in India-China and India-USA, respectively. Research limitations/implications The concern of slim export earnings in most industry groups offers scepticism in maintaining the sustainability of the current account. The problem of the fallacy of composition also cannot be ruled out given the dominance of low vertical IIT. This study argues that these industry groups need to engage in labour market reforms and require access to easy credit to achieve competitiveness in the world market. Originality/value The analysis performed in this paper attempts to integrate the Prebisch-Singer hypothesis in the context of IIT. Empirical evidence to such an issue is not profound.

Prospects for Turkey in 2022

2021 ◽  
Keyword(s):  
Central Bank ◽  
Current Account ◽  
Current Account Deficit ◽  
Main Theme ◽  
Content Type ◽  
Strong Growth

Subject Prospects for Turkey in 2022. Significance The Central Bank may cut its policy rate again tomorrow. The authorities are gambling on weakening the lira despite soaring inflation, emboldened by strong growth and a narrowing current account deficit. The main theme for 2022 will be the following year, when the Turkish Republic’s centenary will be packed with symbolism for both political sides.

scholarly journals Explaining India’s current account deficit: a time series perspective

2019 ◽  
Vol 26 (1) ◽  
pp. 117-138
Author(s):  
Harendra Kumar Behera ◽  
Inder Sekhar Yadav
Keyword(s):  
Current Account ◽  
Unit Root ◽  
Current Account Deficit ◽  
Structural Break ◽  
Current Account Balance ◽  
Fiscal Deficit ◽  
Causality Test ◽  
Content Type ◽  
Financial Account ◽  
Cointegration Tests

Purpose The purpose of this paper is to examine the issue of high current account deficit (CAD) from various perspectives focussing its behaviour, financing pattern and sustainability for India. Design/methodology/approach To begin with the trends, composition and dynamics of CAD for India are analysed. Next, the influence of capital flows on current account is investigated using Granger non-causality test proposed by Toda and Yamamoto (1995) between current account balance (CAB) to GDP ratio and financial account balance to GDP ratio. Also, the sustainability of India’s current account is examined using different econometrics techniques. In particular, Husted’s (1992), Johansen’s cointegration and vector error correction model (VECM) is applied along with conducting unit root and structural break tests wherever applicable. Further, long-run and short-run determinants of the CAB are estimated using Johansen’s VECM. Findings The study found that the widening of CAD is due to fall in household financial savings and corporate investments. Also, it was found that a large part of India’s CAD has been financed by FDI and portfolio investments which are partly replaced by short-term volatile flows. The unit root and cointegration tests indicate a sustainable current account for India. Further, econometric analysis reveals that India’s current account is driven by fiscal deficit, terms of trade growth, inflation, real deposit rate, trade openness, relative income growth and the age dependency factor. Practical implications Since India’s CAD has widened and is expected to widen primarily due to rise in gold and oil imports, policy makers should focus on achieving phenomenal export growth so that a sustainable current account is maintained. Also, with rising working-age and skilled population, India should focus more on high-value product exports rather than low-value manufactured items. Further, on the structural side it is important to correct fiscal deficit as it is one of the important factors contributing to large CAD. Originality/value The paper is an important empirical contribution towards explaining India’s CAD over time using latest and comprehensive data and econometric models.

Belize’s economic recovery will lose steam

2020 ◽  
Keyword(s):  
Current Account ◽  
Current Account Deficit ◽  
Public Investment ◽  
Economic Recovery ◽  
International Reserves ◽  
Severe Drought ◽  
Hydropower Generation ◽  
Short Term ◽  
Content Type ◽  
Primary Surplus

Subject The Belize economy. Significance Belize’s economic recovery is stagnating following a severe drought that has had a harsh impact on agriculture and hydropower generation. The situation has been compounded by a slowdown in tourist arrivals following years of buoyant growth, reflecting weaker global expansion and the grounding of Boeing 737 MAX aircraft, which service the country. Impacts The current account deficit will remain large, with international reserves averaging just three months of imports. The primary surplus will narrow due to increasing spending on wages and public investment and weaker-than-expected revenue. This being an election year, cuts to current expenditures will probably be off the table, limiting debt reduction in the short term. Funding constraints will hit the government’s ability to pursue much-needed reforms in infrastructure and education.

Argentine foreign finance fears will rise this year

2019 ◽  
Keyword(s):  
Current Account ◽  
Trade Balance ◽  
Current Account Deficit ◽  
Foreign Debt ◽  
Economic Downturn ◽  
Content Type ◽  
Agricultural Exports ◽  
Debt Burden ◽  
External Adjustment ◽  
Interest Payments

Significance In 2018 the economic slump and devaluation helped to improve the trade balance by cutting imports. However, the current account deficit reached 5.4% of GDP, up from 4.9% in 2017, due to the growing burden of interest payments on foreign debt, which already represents more than 50% of GDP. Impacts External adjustment will be mostly driven by falling imports; competitiveness woes will prevent a rise in non-agricultural exports. The government's inability to reverse the economic downturn and a growing debt burden will keep default fears high. Access to foreign finance will remain key to guarantee debt servicing.

'Brexit' fallout could hit EU financial assets widely

2016 ◽  
Keyword(s):  
Financial Markets ◽  
Current Account Deficit ◽  
Financial Assets ◽  
Government Bonds ◽  
Content Type ◽  
Eu Membership ◽  
Run Up ◽  
High Yields ◽  
The Uk ◽  
The Eu

Subject The potential fallout from 'Brexit' on both UK and EU-wide financial assets. Significance In the run-up to the June 23 referendum on the United Kingdom's EU membership, the 'Brexit' risk has been weighing on UK confidence and investment. The reaction in financial markets has been more benign, with the pound rising by 3.6% against the dollar since end-February and a 54-basis-point (bp) year-to-date fall in the ten-year gilts yield. The absence of a 'Brexit premium' suggests investors may be underpricing both the UK-specific and EU-wide risks associated with a UK exit from the EU at a time of heightened market volatility. Impacts UK government bonds, along with their US equivalents, will remain attractive to investors because of their relatively high yields. Meanwhile, euro-area and Japanese bonds, whose yields are negative or slightly positive at best, will remain unattractive. The prolonged uncertainty during the post-referendum renegotiations could shave 1.0-1.5 pp off UK GDP growth by end-2017. The wide UK current account deficit and the country's reliance on foreign capital underscore the risks associated with Brexit.

India’s growth will be fragile

2018 ◽  
Keyword(s):  
Stock Market ◽  
Current Account ◽  
Prime Minister ◽  
Current Account Deficit ◽  
General Election ◽  
Gdp Growth ◽  
Economic Downturn ◽  
Hindu Nationalism ◽  
Content Type ◽  
The Current Account

Subject Outlook for India's GDP growth. Significance India’s GDP statistics point to robust growth and its stock market indices suggest a boom. Yet inflation is high, the current account deficit is widening, the rupee has depreciated and investors are increasingly wary. Impacts Prime Minister Narendra Modi will highlight India’s growth figures in campaigning for a second term early next year. Opposition parties will push back on Modi by suggesting India’s growth is largely ‘jobless’. Any sign of an economic downturn prior to the general election could prompt Modi to appeal more to Hindu nationalism to garner support.

Economic downturn may be on the horizon in Ecuador

2019 ◽  
Keyword(s):  
Current Account ◽  
Current Account Deficit ◽  
Oil Prices ◽  
Import Demand ◽  
Export Growth ◽  
Economic Downturn ◽  
Short Term ◽  
Content Type ◽  
The Government ◽  
Spending Cuts

Subject Economic challenges. Significance In the first quarter, Ecuador’s economy grew at its weakest pace since the 2016 recession. The government is facing significant challenges in implementing a recently agreed IMF programme, while President Lenin Moreno’s popularity has plummeted following unpopular, but arguably necessary, spending cuts. Impacts Dollar appreciation and a tightening of global financing conditions would weaken Ecuador’s competitiveness. Short-term, the current account deficit will narrow, as rising oil prices support export growth and the slowdown weighs on import demand. Moreno’s diminishing popularity will exacerbate uncertainty around implementation of the IMF programme.

Twin deficits hypothesis in Bangladesh: an empirical investigation

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sima Rani Dey ◽  
Mohammad Tareque
Keyword(s):  
Current Account ◽  
Budget Deficit ◽  
Good Governance ◽  
Current Account Deficit ◽  
Trade Deficit ◽  
Fiscal Deficit ◽  
Twin Deficits ◽  
Content Type ◽  
Long Run ◽  
The Current Account

PurposeThis study attempts to examine the twin deficits hypothesis for Bangladesh. Along with the traditional twin deficits hypothesis associated with the current account and fiscal deficit, the paper also explores the causal relationship between the trade deficit and fiscal deficit.Design/methodology/approachWe start with the investigation of the conventional twin deficit hypothesis employing autoregressive distributed lag (ARDL) bounds testing approach in a multivariate framework. Due to the absence of cointegration between the budget deficit and trade deficit, the study adopts a multivariate vector autoregressive (VAR) model to analyze the nexus.FindingsThe study supports the presence of the twin deficits hypothesis in Bangladesh, both in the short run and long run. Unidirectional causation running from the budget deficit to the current account deficit in the long run. The trade model also supports the twin deficit hypothesis, like the aforementioned current account model.Practical implicationsTherefore, the sustainable fiscal deficit is the key to maintain a stable current account deficit and trade deficit in Bangladesh.Originality/valueThe study incorporates the country risk indicators to address the governance issue while analyzing the models' deficit scenarios because good governance is an integral part of explaining the development outcome and failure of a country like Bangladesh.

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