Turkey Economic Forecast

Turkey Economic Outlook

February 5, 2019

The economy has begun the new year in uninspiring fashion. In January, the manufacturing PMI remained mired in contractionary territory, with new orders, output and employment continuing to shrink. Moreover, both consumer and business sentiment stayed markedly pessimistic in the same month. This comes after a likely weak outturn in Q4, with consumer spending suffering on the back of high inflation and elevated interest rates, as evidenced by sharp contractions in retail sales in October and November. More positively, the pace of the decline in private-sector credit eased in December, while the external sector has recently seen a marked turnaround—underpinned by the weaker lira and soft domestic demand—as reflected by a fourth consecutive current account surplus in November. In January, the Central Bank announced it was bringing forward the payment of its dividend, which will boost government coffers ahead of the March local elections.

Turkey Economic Growth

The economy is set to remain fragile in the months ahead, with restrictive financial conditions constraining private consumption and fixed investment. However, the external sector will provide support, and a recovery should gradually take hold in H2 as lower inflation gives the Central Bank room to cut interest rates. Currency volatility and the possibility of renewed geopolitical tensions pose significant downside risks. Met the why particular panelists expect the economy to shrink 0.2% in 2019, which is down 0.2 percentage points from last month’s forecast, and to expand 3.1% 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 Yield14.56-0.09 %Feb 14
Exchange Rate5.27-0.85 %Feb 14
Stock Market112,1301.41 %Feb 14

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