11/25/2016
World Bank, Turkey Regular Economic Note November 2016
"We revise our growth projection for 2016 from 3.5% to 3.1% because private investment and consumption appear to have slowed down. The Government plans to ease fiscal policy in Q4 to support growth amid weakening private demand.
World Bank has published the Turkey Regular Economic Note November 2016. According to the Report, the Bank "revises their growth projection for 2016 from 3.5% to 3.1% because private investment and consumption appear to have slowed down. The Government plans to ease fiscal policy in Q4 to support growth amid weakening private demand." Report says that, "the current account deficit is likely to rise in 2016, as tourism revenues fall. The Government plans to ease fiscal policy in Q4 to support growth amid weakening private demand. "Growth continued to slow in Q2 because of weaker domestic demand" According to the Report, growth continued to slow in Q2 because of weaker domestic demand. High frequency indicators suggest a slower growth in the second half of 2016. Recent geopolitical developments have increased domestic uncertanity and weakened business confidence. Report further says that, after falling to a monthly low of USD 27.7 billion in May, the 12-month current account deficit started to increase, reaching USD32.4 billion in September, mainly because of falling tourism revenues. The depreciation of the Lira puts additional strain on the balance sheets of corporates, which have large open FX position, weighing on confidence and investment outlook. "The government is set to ease fiscal policy in Q4 to boost growth" It is further noted in the Report that, tax revenue growth strengthened thanks to capital and ownership revenues, keeping total revenue growth reasonably high. However, the medium-term program anticipates a looser fiscal policy going forward, using fiscal space to support growth. Government consumption is likely to rise in the remainder of the year to offset the weaknesses in private demand and public investment is expected to grow significantly to support GDP growth in 2017. Selected economic indicators
2014
2015
2016
2017
2018
Real GDP Growth Rate (percent)
3,0
4,0
3,1
3,5
3,5
Consumer Price Inflation (end period, in percent)
8,2
8,8
8,0
8,0
7,5
General Government Budget Balance (in percent of GDP)
-0,6
0,0
-2,1
-1,9
-2,0
General Government Debt (in percent of GDP)
36,3
36,0
36,4
36,7
37,0
Current Account Balance (in percent of GDP)
-5,4
-4,5
-4,7
-5,0
-5,5
Annual Report
