ISTANBUL - Turkey's current account deficit narrowed to $9.97 billion in 2024 from nearly $40 billion a year earlier, the central bank said on Thursday, with interest rate hikes and gold trade restrictions having driven the decline.

According to economist Haluk Burumcekci's calculations, the current account deficit-to-GDP ratio fell to around 0.7% in 2024 from 3.6% the previous year. Turkey's long-term average current account deficit is around 3%. 

The government's medium-term programme forecast a current account deficit-to-GDP ratio of 1.7%.

A Reuters poll forecast that the current account deficit will rise to $18 billion in 2025.

In December, the current account deficit widened to $4.65 billion, exceeding the Reuters poll forecast of $4 billion and rising from a deficit of $2.73 billion in November.

Excluding gold and energy, the current account showed a net surplus of $2.47 billion in December, while the goods deficit was $6.24 million.

In 2024, the current account deficit was mainly financed through direct investments, with a net inflow of $4.7 billion, portfolio investments with a net inflow of $11.7 billion and loans with a net inflow of $26.2 billion.

The currency and deposits item, along with trade credits, had a negative impact on the deficit, amounting to $14.0 billion and $5.4 billion respectively.

While net gold and energy imports halved in 2024 to $13.6 billion, net energy imports produced a deficit of $49.1 billion, $3.6 billion less than the previous year.

(Reporting by Nevzat Devranoglu; Writing by Daren Butler; Editing by Jonathan Spicer)