The Turkish economy is expected to expand between 2% and 2.5% this year, government officials told Reuters on July 6, adding that the heightened political uncertainty, including the possibility of a snap election, is suppressing investment.
The euro zone crisis, as well as violence in Syria and Iraq, are also hampering investment, according to officials.
Looking at the current situation, growth may be about 2%, growth of 2.5% would be a good rate, one senior official told Reuters, adding that even if measures to boost investor confidence are taken, growth would still only be 3%.
Another official said that depending on the result of coalition talks between political parties, GDP could still increase by 3%, while 2% is a more pessimistic expectation.
Last week, economy minister Nihat Zeybekci commented that economic growth will be higher in the second quarter than the first quarter. Domestic demand will be a key driver in 2015 growth, according to Zeybekci.
Turkey’s GDP growth slowed to 2.3% y/y in Q1, after an expansion of 2.6% y/y in the last quarter of 2014. In the whole of 2014, the Turkish economy grew by 2.9%.
The World Bank last week cut its 2016 and 2017 growth forecasts for Turkey to 3.5% (from a previous 3.9% and 3.7%, respectively), citing the uncertain political outlook while maintaining its growth forecast at 3% for 2015.
| GDP Growth Projections for Turkey | ||
| (%) | 2015 | 2016 |
| EBRD (May 2015) | 3.0 | 3.0 |
| European Commission (May 2015) | 3.2 | 3.7 |
| Turkish Government - Medium Term Programme for 2015-2017 (Oct 2014) | 4.0 | 5.0 |
| IMF (April 2015) | 3.1 | 3.6 |
| Turkish Central Bank survey (April 2015) | 3.1 | 3.6 |
| World Bank (Apr 2015) | 3.0 | 3.5 |
| OECD (June 2015) | 3.1 | 3.9 |
| S&P (May 2015) | 3.0 | 3.2 |
| Source: ebrd, ec, dpt, imf, tcmb, oecd, world bank, s&p, kap |
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