Turkey Economic Forecast

Turkey Economic Outlook

April 2, 2019

The lira has again come under severe stress in recent weeks, due to concerns over monetary and fiscal policy, with last year’s currency crisis still fresh in the minds of investors. In late March, the offshore overnight swap rate sky-rocketed and the Central Bank’s international reserves plummeted in attempts to prevent short-selling of the currency. The local elections, in which the AKP lost control over Ankara and Istanbul, took place against the background of a battered economy, which contracted sharply at the close of last year on collapsing domestic demand, undermined by deteriorating sentiment, high inflation and tougher financial conditions. Data on Q1 2019 remained grim, with consumer sentiment and the manufacturing PMI remaining depressed through March, suggesting the economy shrank in the quarter; however, fiscal stimulus should have alleviated some pains.

Turkey Economic Growth

The economy will likely contract this year amid feeble domestic demand due to persistently high inflation, rising unemployment and currency weakness. In H2, the economy should recover somewhat, which would provide room for the Central Bank to loosen monetary policy and spur activity. Currency volatility and lingering geopolitical tensions cloud the outlook. Met the why particular Consensus Forecast panelists expect the economy to shrink 0.8% in 2019, which is down 0.5 percentage points from last month’s forecast, and to expand 3.0% 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 %)-  -  -  -  -  
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 Yield17.55-0.09 %Apr 12
Exchange Rate5.77-0.85 %Apr 12
Stock Market95,9771.41 %Apr 12

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