Growth in Turkey is likely to accelerate to 3.7% this year before moderating slightly to 3.6% in 2014, the EBRD forecasts in its latest Regional Economic Prospects report. In its May forecast, the EBRD had foreseen a GDP growth of 4% for 2014 but it has not changed its 2013 forecast.
Recall that in October the Turkish government cut its 2013 GDP growth estimate to 3.6% from 4% and its 2014 forecast to 4% from 5%. Earlier this month, the European Commission said in its autumn forecasts that it expected the Turkish economy to expand 3.5% this year and 3% in 2014.
Economic activity picked up in H1, driven mainly by domestic demand, however, the recent tightening by the central bank is expected to further moderate economic activity in the second half of the year, the EBRD noted.
Turkey’s large and persistent current account deficit and the country’s dependence on volatile portfolio capital inflows to finance this deficit continue to be major sources of vulnerability, the EBRD said. With the current account deficit and gross external financing needs expected to remain elevated, a weakening or a reversal of capital flows would present a major challenge for the Turkish economy, according to the EBRD.
| GDP Growth Projections for Turkey | ||
| (%) | 2013 | 2014 |
| EBRD | 3.7 | 3.6 |
| European Commission | 3.5 | 3 |
| Turkish Government | 3.6 | 4 |
| IMF | 3.4 | 3.5 |
| Turkish Central Bank survey | 3.5 | 3.9 |
| Source: ebrd, ec, dpt, imf, tcmb | ||
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