Turkey Economic Forecast

Turkey Economic Outlook

July 31, 2018

The economy likely lost momentum in Q2 on tighter credit conditions, as overheating concerns swirl. Industrial production growth in April and May was down notably from Q1’s stellar print, while the expansion in retail sales slowed markedly in May and the manufacturing PMI was in negative territory throughout Q2. Heading into the third quarter, business sentiment withered in July on lower optimism regarding current orders, general business conditions and employment. Economic imbalances furthermore continue to intensify: Inflation in June was triple the Central Bank’s target, while the current account deficit broadened further in May. Against this backdrop, President Erdogan announced his cabinet on 9 July. His son-in-law Berat Albayrak, the former energy minister, will head the new treasury and finance ministry. He effectively replaces Mehmet Simsek and Naci Agbal, two business-friendly ministers, adding to market concerns over the direction of economic policy.

Turkey Economic Growth

Economic growth will likely weaken in the coming quarters, on tighter financial conditions, shaky investor sentiment and a higher oil import bill. Exchange rate volatility, geopolitical tensions, a gaping current account deficit and elevated inflation pose downside risks. Met the why particular panelists expect growth of 4.2% this year, which is unchanged from last month’s estimate. They see growth of 3.5% in 2019.

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 Yield20.59-0.09 %Aug 15
Exchange Rate5.99-0.85 %Aug 15
Stock Market90,2631.41 %Aug 15

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