Turkey Economic Forecast

Turkey Economic Outlook

May 8, 2018

President Erdogan recently called snap elections for 24 June, against the backdrop of an economy beginning to show signs of strain from the government’s fiscal stimulus drive. The manufacturing PMI crashed into negative territory in April on lower new orders and employment, while the current account deficit ballooned in annual terms in the first two months of the year. In addition, the lira fell to an all-time low against the dollar in early May, prompting the Central Bank to tweak banks’ reserve requirements in an attempt to halt the decline. Citing worsening external metrics and rising imbalances, on 1 May Standard and Poor’s downgraded Turkey’s credit rating; this came after a similar move by Moody’s in March. More positively, industrial production growth was solid in February, while business sentiment remains elevated. In addition, economic growth in Q1 was likely robust, despite a moderation from Q4’s blistering pace. Ahead of polling day, the government is turning the fiscal taps on full blast, and it recently announced major new spending initiatives.

Turkey Economic Growth

The economy is expected to lose momentum this year after performing above potential in 2017, as credit growth ebbs amid tighter financial conditions, and fiscal stimulus gradually dims. Exchange rate volatility, geopolitical tensions, a widening current account deficit and elevated inflation pose downside risks. Met the why particular panelists expect growth of 4.4% this year, which is up 0.3 percentage points from last month’s estimate. They see growth of 3.9% in 2019.

Turkey Economy Data

20132014201520162017
Population (million)76.577.378.779.879.8
GDP per capita (USD)12,41512,08411,89311,731-  
GDP (USD bn)950934858856-  
Economic Growth (GDP, annual variation in %)8.55.26.12.9-  
Domestic Demand (annual variation in %)9.53.66.43.1-  
Consumption (annual variation in %)7.93.05.52.3-  
Investment (annual variation in %)13.85.19.23.0-  
Industrial Production (annual variation in %)3.53.52.91.8-  
Unemployment Rate9.111.011.311.9-  
Fiscal Balance (% of GDP)-1.0-1.1-1.0-1.1-  
Public Debt (% of GDP)36.133.527.528.3-  
Money (annual variation in %)21.511.918.416.6-  
Inflation Rate (CPI, annual variation in %, eop)7.48.28.88.5-  
Inflation Rate (CPI, annual variation in %)7.58.97.77.8-  
Inflation (PPI, annual variation in %)7.06.45.79.9-  
Policy Interest Rate (%)4.508.257.508.00-  
Stock Market (annual variation in %)-13.326.4-  -  -  
Exchange Rate (vs USD)2.152.332.923.53-  
Exchange Rate (vs USD, aop)1.912.192.733.02-  
Current Account (% of GDP)-6.7-4.7-3.7-3.8-  
Current Account Balance (USD bn)-63.6-43.6-32.1-32.6-  
Trade Balance (USD billion)-79.9-63.6-48.1-11.9-  
Exports (USD billion)162169152150-  
Imports (USD billion)242233200191-  
Exports (annual variation in %)-0.14.4-11.0-1.2-  
Imports (annual variation in %)6.3-3.8-14.0-4.5-  
International Reserves (USD)11111792.992.2-  
External Debt (% of GDP)41.143.046.247.3-  

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Turkey Facts

ValueChangeDate
Bond Yield14.58-0.09 %May 21
Exchange Rate4.57-0.85 %May 21
Stock Market112,2581.41 %May 21

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