EU Commission nearly doubles Turkey’s 2017 growth forecast

AFTER a number of international institutions and organizations increased their growth estimates for Turkey recently, the European Commission (EC) yesterday also increased its 2017 growth forecast for Turkey by more than 2 percentage points.

According to the European Economic Forecast Autumn report published yesterday, Brussels’ latest set of economic forecasts project that the Turkish economy will grow 5.3 percent in 2017, up from its previous estimate of 3 percent in May.

The EC raised the country’s economic growth forecast for 2018 from 3.3 percent to 4 percent.

The Turkish economy is also expected to grow 4.1 percent in 2019.

Turkey’s economy grew 5.2 percent in the first quarter of this year and 5.1 percent in the second quarter, compared with the same periods in 2016, according to the Turkish Statistical Institute (TurkStat).

“The government’s fiscal stimulus this year - supported by stronger exports, a significantly depreciated Turkish lira in comparison with last year and a strong boost from public finances and other policy incentives, intended to restore confidence in the Turkish economy,” the report said.

The report noted the growth of pri- vate consumption was expected to increase toward the end of this year and continue its expansion in 2018-19.

On the other hand, the EU Commission has lowered the 2017 inflation forecast for Turkey from 11.1 percent to 11 percent. It also decreased the inflation expectation from 8.6 to 8.5 percent for 2018 and 7.6 percent for 2019.

The commission has revised the unemployment rate estimate for 2017 from 13.6 percent to 11.3 percent. Expectations for 2018 were reduced from 14.1 percent to 11 percent, while the unemployment rate for the year 2019 was determined as 10.7 percent.

The increase follows the International Monetary Fund upping Turkey’s 2017 growth forecast 2.6 percentage points on Oct. 10, and the World Bank raising its forecast 0.4 percentage points on Oct. 19.

On Nov. 7, The European Bank for Reconstruction and Development (EBRD) also upgraded its 2017 growth forecast for Turkey by 2.6 percentage points.

The EBRD projects that the Turkish economy will grow 5.1 percent in 2017 and 3.5 percent in 2018.

“Growth in Turkey is projected to accelerate to 5.1 percent in 2017 on the back of government stimulus before moderating to 3.5 percent in 2018 as the impact of the fiscal stimulus wears out,” the report said.