The relationship between economic growth and current account balance: A case of Turkey

The current account deficit has become the most important economic issue of Turkey's economy after 1980. It had grown increasingly over the years and become chronic for long time. Even, it is one of the most significant issues in whole economies today. The main goal of this study is to investigate the relationship between current account balance and economic growth in Turkey by using quarterly data for the period of 2003: Q1 - 2019: Q4. In this study ARDL methodology has been applied. Dummy variables were used considering the impact of the global economic crisis in 2008 on the Turkish economy. Additionally, the current account balance was converted into TL currency and then divided into CPI index hence it is free from the price effect. The conclusions provide strong evidence that there is a both statistically and economically significant relationship between the real GDP growth and the current account balance in the long run. When the current account deficit is high in the Turkish economy, the rate of economic growth has generally increased as well.