World Bank revises growth forecast for Turkey

World Bank revises growth forecast for Turkey

World Bank revises growth forecast for Turkey

The World Bank has revised upwards its economic growth forecast for the Turkish economy for 2019, citing improvement in domestic demand.

The Turkish economy will record zero percent GDP growth this year, the bank said in its Economic Update for Europe and Central Asia, released on Oct. 9.

In its June report, the World Bank had predicted that the Turkish economy would contract 1 percent in 2019.

According to the latest bank estimates, the country’s GDP growth will rebound to 3 percent this year and a higher 4 percent in 2021.

“Gradual improvement in domestic demand and net exports are expected to support growth over the forecast horizon, provided that fiscal and monetary policy avert further sharp declines in the lira and corporate debt restructurings help prevent serious damage to the financial system,” the report said.

The World Bank expects private consumption to increase 1 percent this year and 2.2 percent in the next. The bank predicts that private consumption growth will gather pace to 3.3 percent in 2021.

“Leading indicators suggest that the economy continued its recovery in the third quarter,” the report added.

It underlined that the country’s manufacturing capacity utilization is nearing long-term averages, retail sales are on a moderately increasing trend, and real sector indicators have recovered to their levels from a year ago.

In its New Economic Program, released in September, the Turkish government predicts 0.5 percent economic growth this year.

The government targets 5 percent growth in the following three years.

The bank also expects Turkey to record a moderate current account deficit in 2019 “as import demand begins to recover in the second half of the year.”

It predicts that the current account deficit will stand at 0.8 percent of the GDP this year. The gap will widen to 3.1 percent and 3.8 percent of national income in 2021 and 2022, respectively, according to the bank.

The World Bank forecasts that Turkey’s inflation rate will ease to 11 percent next year after hitting 16.5 percent at the end of 2019.

The government’s inflation target is 12 percent for this year while aiming for 8.5 percent and 6 percent inflation rates in 2020 and 2021, respectively.

Competitiveness ranking

Meanwhile, Turkey ranked 61st among 141 economies in the World Economic Forum’s (WEF) 2019 edition of The Global Competitiveness Report, unchanged from the previous report.

Turkey’s overall score increased by 0.5 from 2018 to 62.1 (score ranges between 0 and 100) this year.

“Turkey’s performance is mixed, with significant progress in some dimensions while losing some ground in others,” the WEF said.

Among the most improved elements, Turkey advances on ICT (information and communication technology) adoption (+4.3 points, 69th), infrastructure (+1.7, 49th) and labor market (+1.7 points) pillars.

“These improvements, in addition to the large market size [13th], sustain Turkey’s competitiveness performance,” the WEF concluded.

Singapore has overtaken the U.S. to become the most competitive nation in the world.