EBRD slashes Turkey growth forecasts

london — The European Bank for Reconstruction and Development (EBRD) slashed growth forecasts on Thursday for Turkey, its biggest lending market, but left the rest of its region largely unscathed despite growing pressures.

The development bank still expects all 38 of the economies where it works to grow this year and next, but cutting Turkey’s forecast a combined 4 percentage points, along with a possible brief recession there, will lower the region’s overall growth rate by 0.6 per cent points to 2.6 per cent next year.

We have downgraded our Turkey forecasts to 1 per cent [for 2019] and that of course has a major impact on our overall forecast for the whole region

Sergei Guriev, chief economist, EBRD

It comes after turmoil in Turkey, where the lira has lost roughly a third of its value and forced the country’s central bank to nearly double domestic interest rates to fend off a full-blown currency crisis.

“We have downgraded our Turkey forecasts to 1 per cent (for 2019) and that of course has a major impact on our overall forecast for the whole region,” Sergei Guriev, EBRD’s chief economist said.