Strong credit expansion, real currency appreciation and strong domestic demand growth caused Turkey's current-account deficit to rise from a six-year low of 2.3% of GDP in 2009 to an estimated 6.7% in 2010. We expect similarly large deficits of 6-7% of GDP in 2011-12 as the impact of slower credit growth and therefore import demand will be offset by higher than previously expected oil prices and sluggish export demand as a result of fiscal tightening in the EU, Turkey's largest market. In 2013-15 a slight improvement is forecast as we expect export demand to recover gradually and international oil prices to ease. However, the deficit will still be large at 5-6% of GDP.