Last week, two international institutions revised their growth forecasts for Turkey. One thinks economic growth will soar due to incentives, while the other weighted political uncertainty and cut its forecast.
IIF increases its growth forecast for Turkey to 4.2%
Researchers from the Institute of International Finance (IIF) bumped up their forecast for Turkey’s economic growth to 4.2 percent for 2017, reflecting a rebound after the attempted coup in Turkey in July 2016 took a huge bite out of commerce. IIF economists Ondrej Schneider and Ugras Ulku and analyst Yalcin Oney, who recently returned to Washington from Turkey, published a note on May 4 raising their GDP forecast to 4.2 percent for 2017, from a previous 3 percent, and to 3.5 percent for 2018 from 3.2 percent percent. Data now shows the effect of government efforts to stimulate borrowing after the failed coup, which was followed by more than 100,000 arrests, detentions or firings in the government’s ongoing investigation. The trio from IIF thinks the environment is positive for gross domestic product, which expanded 2.9 percent in 2016 from 6.1 percent in 2015, with reduced political uncertainty after the April referendum, ongoing fiscal easing and the Credit Guarantee Fund. But rising interest rates will weigh on investment and consumption later this year.
EBRD cuts 2017 growth forecast for Turkey to 2.6 percent
GDP growth in Turkey is now projected to fall slightly to 2.6 percent in 2017 from 2.9 percent in 2016, reflecting increased capital outflows and a weaker outlook for investment on the back of political uncertainty, the European Bank for Reconstruction and Development (EBRD) said on Wednesday in its Regional Economic Prospects report. In its previous report, issued in November 2016, the bank had already cut its 2017 growth forecast for Turkey to 3 percent from 3.4 percent anticipated in the May 2016 report. The weakened outlook for Turkey reflects security and geopolitical risks and the related drop in tourism receipts and investment, the EBRD said in its report. The economic outlook in the region remains materially affected by terrorism, geopolitical tensions and the refugee crisis. In the last six months, Egypt, Jordan, Russia and Turkey have experienced several terrorist attacks, while Syria remains engulfed in a humanitarian crisis.