Economic policies focusing on macro-financial risks in Turkey attribute special emphasis on current account developments. In this context, quantifying the role of cyclical factors in driving current account deficit is crucial for the design of an appropriate policy response against current account volatility. Using a simple methodology, this note decomposes the cyclical/transitory part of the current account in Turkey, with special reference to its three components, namely foreign demand, domestic demand and foreign trade prices. The estimations under various assumptions indicate that the main trend of the current account deficit hovers around 5 percent of GDP in recent years. Our findings contribute to the understanding of recent dynamics in the current account and associated policies.
