Turkey Economic Forecast

Turkey Economic Outlook

September 8, 2020

The Covid-19 pandemic severely derailed the economy in Q2, with GDP contracting at the steepest rate in over a decade as restrictive measures at home and abroad weighed heavily on domestic and foreign demand. Private consumption nosedived in the quarter, while exports collapsed by over a third compared to a year prior—the strongest decline since current records began in 1999. Looking to the third quarter, prospects are not much rosier. Consumer confidence remained entrenched in pessimistic territory in July–August, while manufacturing capacity in August was still below the levels seen during the aftermath of the 2018 currency crisis. On the other hand, business confidence rose notably in July–August, while manufacturing business conditions improved greatly and consumer credit growth skyrocketed in July. That said, the ongoing lira depreciation will weigh on businesses and households.

Turkey Economic Growth

A contraction is expected this year due to the pandemic, with containment measures restricting domestic and foreign demand. The weakening currency should continue to weigh on the private sector, while a rising unemployment rate limits household spending. Fiscal and monetary stimulus should cushion the fall somewhat, however. FocusEconomics Consensus Forecast panelists project the economy to contract 4.0% in 2020, which is up 0.1 percentage points from last month, and to expand 4.9% in 2021.

Turkey Economy Data

2015 2016 2017 2018 2019
Population (million)78.779.880.882.083.0
GDP per capita (USD)10,89810,80510,5569,3849,078
GDP (USD bn)858862853770754
Economic Growth (GDP, annual variation in %)6.13.27.52.80.9
Domestic Demand (annual variation in %)5.44.47.2-0.8-1.4
Consumption (annual variation in %)5.43.76.20.00.7
Investment (annual variation in %)9.32.28.2-0.6-12.4
Industrial Production (annual variation in %)6.13.49.11.1-0.6
Unemployment Rate10.310.910.911.013.7
Fiscal Balance (% of GDP)-1.0-1.1-1.5-2.0-2.9
Public Debt (% of GDP)27.528.228.230.433.1
Money (annual variation in %)17.417.615.519.426.6
Inflation Rate (CPI, annual variation in %, eop)8.88.511.920.311.8
Inflation Rate (CPI, annual variation in %)7.77.811.116.315.2
Inflation (PPI, annual variation in %)-  -  -  -  -  
Policy Interest Rate (%)7.508.008.0024.0012.00
Stock Market (annual variation in %)-  -  -  -  -  
Exchange Rate (vs USD)2.923.533.795.295.95
Exchange Rate (vs USD, aop)2.733.023.654.845.68
Current Account (% of GDP)-3.2-3.1-4.8-2.71.2
Current Account Balance (USD bn)-27.3-26.9-40.6-20.88.7
Trade Balance (USD billion)-49.0-39.9-58.6-40.8-16.7
Exports (USD billion)155153169179182
Imports (USD billion)204193228220199
Exports (annual variation in %)-10.6-1.410.85.71.9
Imports (annual variation in %)-15.0-5.518.3-3.6-9.4
International Reserves (USD)92.992.184.272.978.6
External Debt (% of GDP)46.647.453.357.758.0

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Turkey Facts

Value Change Date
Bond Yield12.00-0.09 %Dec 31
Exchange Rate5.95-0.85 %Jan 01

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