Turkey Economic Forecast

Turkey Economic Outlook

October 30, 2018

Recent indicators show the economy screeching to a halt as the effects of the currency crisis continue to reverberate. In October, consumer and business confidence moved further into pessimistic territory and marked fresh multi-year lows, although the pace of the decline slowed. Moreover, automotive sales collapsed in Q3, while industrial production and retail sales growth slowed markedly in August. More positively, the lira has gained substantial ground in recent weeks, which should lessen corporates’ external debt burdens somewhat. The appreciation has come on the back of higher interest rates, the government’s commitment to a tighter fiscal stance in the New Economic Plan, and the release of a U.S. pastor in mid-October, which soothed geopolitical tensions with the U.S. Moreover, Turkey was able to raise USD 2 billion in international bond markets recently in an oversubscribed sale, marking an early sign of a gradual return of confidence in the economy.

Turkey Economic Growth

The economy will perform poorly next year, 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 0.5% in 2019, down 0.5 percentage points from last month’s forecast, and 3.4% in 2020.

Turkey Economy Data

20132014201520162017
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 %)8.55.26.13.27.4
Domestic Demand (annual variation in %)11.03.25.44.47.1
Consumption (annual variation in %)7.93.05.43.76.1
Investment (annual variation in %)13.85.19.32.27.3
Industrial Production (annual variation in %)7.25.75.83.48.9
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)7.48.28.88.511.9
Inflation Rate (CPI, annual variation in %)7.58.97.77.811.1
Inflation (PPI, annual variation in %)7.06.45.79.915.5
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

ValueChangeDate
Bond Yield16.01-0.09 %Nov 15
Exchange Rate5.35-0.85 %Nov 15
Stock Market93,2971.41 %Nov 15

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