Investment bank Galt & Taggart updated its forecast on the current account deficit. According to the document, Galt&Taggart expects the current account deficit to increase to 5.4% of GDP in 2023, as transfers expected to normalize from last year’s high base.
"Current account (CA) deficit reduced to a record low 4.1% of GDP in 2022 CA deficit reduced to a record low 4.1% of GDP in 2022, from a 10.4% in 2021, according to NBG. The improvement in the CA balance was due to the strong growth in the service balance (reflecting a strong recovery in tourism revenues, amounting to USD 3.5bn in 2022, surpassing 2019 level by 7.7%), followed by transfers balance.
The merchandize trade deficit, traditionally the major contributor to deficit creation, increased by 35.5% y/y to US$ 5.1bn, as exports increased by 35.8% y/y and imports were up 35.7% y/y. Notably, the positive balance in services and transfers was 1.1x higher than the trade deficit in 2022. In addition, the net FDI (+79.6% y/y to USD 1.7bn, 6.7% of GDP) was 1.6x higher than CA deficit in 2022. We expect current account deficit to increase to 5.4% of GDP in 2023, as transfers expected to normalize from last year’s high base", - Galt&Taggart reports.
