ISTANBUL (Reuters] – Turkey’s current account deficit is forecast to grow to $32 billion, or 4.0%, this year. That’s more than what was previously predicted by Goldman Sachs. The reason for the increase in commodity prices due the conflict in Ukraine, and Ankara’s refusal to raise rates, Goldman Sachs (NYSE NYSE:).

Wall Street bank stated that the trade balance, which has been chronically negative due to Turkey’s dependence on imports, will be helped by foreigners.

It stated that “these inflows would not be sufficient to finance the growing current accounts deficit and (official foreign currency reserves) will both come under severe pressure.”

It stated that high commodity prices could make it “more difficult than necessary to adjust Turkey’s current accounts.”

Goldman stated that the current Turkish account deficit is now at 4.0%, compared to 2.5% in 2022. It could rise if the authorities continue to resist slowdowns in domestic demand.

Turkey imports almost all of its oil and natural gas. However, Turkey’s costs have soared since Russia invaded Ukraine. This prompted severe sanctions which sent commodities prices skyrocketing. Russia and Ukraine are also important suppliers of grain to Turkey.

This has jeopardized President Tayyip Erdan’s unconventional economic program, which is based upon low interest rates and higher production to create a surplus in the current account.

Erdogan stated this week that it was ambitious to anticipate a significant rise in tourism in the year ahead, as a reference to the effects of war.

Real rates have been impacted by the central bank cutting its rate to 14%. This is despite inflation having soared up to 54%. It is predicted that inflation will hover around 60% throughout the remainder of the year.

Goldman stated that they don’t expect the bank to raise its official policy rate at this time. However, the bank will eventually have to react and could do so with new instruments, macroprudential steps, tightening via other channels or heterodox measures.