Turkey Economic Forecast

Turkey Economic Outlook

November 28, 2017

The tailwinds that boosted GDP growth in the first three quarters of the year are starting to fade, and the country’s structural imbalances are becoming more acute. Furthermore, the economy is showing signs of overheating: Inflation reached a nine-year high in October, and the cumulative current account deficit widened to a two-year high in September. The widening current account deficit has become increasingly difficult to finance, which has in turn resulted in a steady drawdown of foreign reserves since the start of the year. In addition to weakening economic fundamentals, the ongoing diplomatic spat between Turkey and the U.S., as well as President Erdogan’s renewed dispute with Central Bank officials, caused the lira to weaken to record lows and Turkey’s 10-year bond yields to tumble in late November.

Turkey Economic Growth

The government’s attempt to limit policy stimulus next year ahead of the 2019 election cycle and an unfavorable base effect will lead GDP growth to moderate in 2018. The FocusEconomics panel expects growth to come in at 3.5%, which is unchanged from last month’s estimate. The risk of a sustained depreciation of the lira and unanchored inflation expectations are, however, weighing heavily on the outlook. Our panel expects growth of 3.7% in 2019.

Turkey Economy Data

20122013201420152016
Population (million)75.676.577.378.779.8
GDP per capita (USD)11,52912,41512,08410,89310,731
GDP (USD bn)872950934858856
Economic Growth (GDP, annual variation in %)4.88.55.26.12.9
Domestic Demand (annual variation in %)3.59.53.66.43.1
Consumption (annual variation in %)3.27.93.05.52.3
Investment (annual variation in %)2.713.85.19.23.0
Industrial Production (annual variation in %)2.43.53.52.91.8
Unemployment Rate8.49.110.010.310.9
Fiscal Balance (% of GDP)-1.9-1.0-1.1-1.0-1.1
Public Debt (% of GDP)36.236.133.527.528.3
Money (annual variation in %)12.521.511.918.416.6
Inflation Rate (CPI, annual variation in %, eop)6.27.48.28.88.5
Inflation Rate (CPI, annual variation in %)8.97.58.97.77.8
Inflation (PPI, annual variation in %)2.57.06.45.79.9
Policy Interest Rate (%)5.504.508.257.508.00
Stock Market (annual variation in %)52.6-13.326.4-  -  
Exchange Rate (vs USD)1.782.152.332.923.53
Exchange Rate (vs USD, aop)1.801.912.192.733.02
Current Account (% of GDP)-5.5-6.7-4.7-3.7-3.8
Current Account Balance (USD bn)-48.0-63.6-43.6-32.1-32.6
Trade Balance (USD billion)-65.4-79.9-63.6-48.1-40.9
Exports (USD billion)162162169152150
Imports (USD billion)227242233200191
Exports (annual variation in %)13.7-0.14.4-10.0-1.2
Imports (annual variation in %)-1.86.3-3.8-14.0-4.5
International Reserves (USD)99.911110792.992.2
External Debt (% of GDP)38.941.143.046.247.3

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Turkey Facts

ValueChangeDate
Bond Yield11.68-0.09 %Dec 06
Exchange Rate3.85-0.85 %Dec 06
Stock Market105,3041.41 %Dec 06

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