Turkey Economic Forecast

Turkey Economic Outlook

November 27, 2018

The economy appeared to slow sharply in the third quarter on financial and currency market volatility, and soaring inflation. Annual retail sales growth virtually flatlined, industrial production was limp and the unemployment rate rose notably in July and August. Looking to Q4, economic conditions remain gloomy. Business and consumer confidence stayed downbeat in November despite registering improvements, while automotive sales continued to plummet in year-on-year terms in October—an ominous sign for private consumption in the final quarter. Moreover, despite a slight uptick, the manufacturing PMI was deep in contractionary territory in October on lower new orders, output and employment. More positively, the lira has continued to strengthen over the last month thanks to thawing relations with the U.S. and a marked turnaround in the current account, which should ease corporates’ external debt burdens. In late October, Finance Minister Berat Albayrak presented a fiscally cautious 2019 budget to parliament.

Turkey Economic Growth

Growth next year will likely be soft, weighed down by restrictive financial conditions constraining private consumption and fixed investment, and the government’s tighter fiscal stance. However, the external sector should provide some support. Further exchange rate volatility and the possibility of renewed geopolitical tensions pose significant downside risks. Met the why particular panelists expect growth of 0.2% in 2019, down 0.3 percentage points from last month’s forecast, and 3.3% in 2020.

Turkey Economy Data

Population (million)76.777.778.779.880.8
GDP per capita (USD)12,38612,02611,89811,80511,536
GDP (USD bn)950934858862851
Economic Growth (GDP, annual variation in %)
Domestic Demand (annual variation in %)
Consumption (annual variation in %)
Investment (annual variation in %)
Industrial Production (annual variation in %)
Unemployment Rate9.111.011.311.911.9
Fiscal Balance (% of GDP)-1.0-1.1-1.0-1.1-1.5
Public Debt (% of GDP)31.328.627.528.328.3
Money (annual variation in %)21.511.917.417.615.5
Inflation Rate (CPI, annual variation in %, eop)
Inflation Rate (CPI, annual variation in %)
Inflation (PPI, annual variation in %)
Policy Interest Rate (%)4.508.257.508.008.00
Stock Market (annual variation in %)-13.326.4-16.38.947.6
Exchange Rate (vs USD)2.152.332.923.533.79
Exchange Rate (vs USD, aop)1.912.192.733.023.65
Current Account (% of GDP)-6.7-4.7-3.7-3.8-5.6
Current Account Balance (USD bn)-63.6-43.6-32.1-33.1-47.4
Trade Balance (USD billion)-79.9-63.6-48.1-11.9-58.9
Exports (USD billion)162169152150166
Imports (USD billion)242233200191225
Exports (annual variation in %)-0.14.4-11.0-1.211.7
Imports (annual variation in %)6.3-3.8-13.9-4.517.8
International Reserves (USD)11111792.992.184.2
External Debt (% of GDP)41.343.346.647.353.2

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Turkey Facts

Bond Yield17.30-0.09 %Dec 14
Exchange Rate5.36-0.85 %Dec 14
Stock Market90,5291.41 %Dec 14

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