Turkey Economic Forecast

Turkey Economic Outlook

July 30, 2019

The economy is expected to have shrunk again in the second quarter. On an annual basis, industrial output continued to fall in April and May, albeit at a more moderate pace than in Q1 amid a softer contraction in manufacturing production. The manufacturing PMI, meanwhile, remained entrenched in contractionary territory through the quarter despite reaching a near one-year high in June. Furthermore, retail sales fell at a sharper pace in April–May than in Q1. This came amid ongoing currency weakness; frail consumer credit growth; and still-elevated inflationary pressures in the quarter. More positively, the current account balance has improved notably in annual terms so far this year, although this is due to meek domestic demand and a shaky lira. Meanwhile, geopolitical tensions with the U.S. and EU resurfaced in recent weeks, which could shake an already rocky economy.

Turkey Economic Growth

The economy should contract this year on collapsing domestic demand amid high inflation, rising unemployment and a weak currency. However, the external sector should provide some support, and later in the year the economy should recover amid looser monetary conditions and a supportive base effect. Currency volatility and geopolitical tensions cloud the outlook, however. FocusEconomics Consensus Forecast panelists expect the economy to shrink 1.4% in 2019, which is unchanged from last month’s forecast, and to expand 2.3% in 2020.

Turkey Economy Data

Population (million)76.777.778.779.880.8
GDP per capita (USD)12,38612,02610,89810,80510,542
GDP (USD bn)950934858862852
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 Rate9.09.910.310.910.9
Fiscal Balance (% of GDP)-1.0-1.1-1.0-1.1-1.5
Public Debt (% of GDP)31.428.827.628.328.3
Money (annual variation in %)22.211.917.118.315.7
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)-63.6-43.6-32.2-33.1-47.4
Trade Balance (USD billion)-79.9-63.6-48.1-40.9-59.0
Exports (USD billion)162169152150166
Imports (USD billion)242233200191225
Exports (annual variation in %)-0.14.4-10.0-1.210.7
Imports (annual variation in %)6.3-3.8-13.9-4.517.8
International Reserves (USD)11110792.992.184.2
External Debt (% of GDP)41.443.546.747.553.5

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Turkey Facts

Bond Yield14.91-0.09 %Jul 31
Exchange Rate5.59-0.85 %Jul 31
Stock Market102,0821.41 %Jul 31

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