The Turkish economy is expected to grow 3.6% this year, supported by relatively loose macroeconomic policies, as a result, Turkey’s current account deficit is expected to widen further to 6.9% of its GDP in 2013, the World Bank said in the latest issue of the Global Economic Prospects report. This was lower than the Bank’s 4% GDP growth forecast (this is also the Turkish government’s projection) in the previous report released in January.
GDP growth accelerated to 3% y/y in Q1/2013 from 1.4% y/y in the previous quarter supported by strong government investment and private consumption. Private investments contracted again in the quarter. Last month, OECD cut its 2013 GDP growth estimate for the Turkish economy to 3.1% from 4.1%. In April, the IMF also trimmed its 2013 GDP growth forecast for the Turkish economy to 3.4% from 3.5%.
The Wold Bank kept its GDP growth forecast for 2014 unchanged at 4.5% while it expects GDP growth to accelerate to 4.7% in 2015. Turkey’s current acceleration in growth has been generating inflationary pressures, and increasing current account deficits, the Bank commented. The Bank’s current account deficit forecasts for 2014 and 2015 are 7.1% of GDP and 7.2%, respectively.
Finance minister Mehmet Simsek said on Wednesday that the 3% growth recorded in the first quarter is in line with the government’s full-year forecast but the impact of the recent political unrests on economic activity is yet to be seen. The outflow from Turkey’s stock market and bond market amounted to USD 1.1bn and USD 260mn over the past week, Simsek also said.
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