Economists Raise Turkey's 2017 Growth Forecast to Record High

  • Estimate of 4.1% is highest for year since survey began in ’15
  • GDP grew 5% and beat all estimates in first quarter of 2017

Turkey’s economy will expand more than previously expected in 2017, thanks to strong government and consumer spending, according to a new Bloomberg survey.

Economists boosted their forecasts for the sixth month in a row and expect gross domestic product to grow 4.1 percent this year compared with 3.9 percent previously. The economy grew 5 percent in the first quarter compared to a year earlier, beating all estimates, as the government rolled out record breaking stimulus measures to help growth.

Last month, Turkey’s central bank kept all its main interest rates unchanged and said it would keep policy tight until the outlook for consumer inflation improves. Economists maintained their inflation forecasts across the board this month and continue to see consumer prices averaging 10.4 percent this year and ending the year at 9.4 percent.

Key Takeaways

  • Survey of 34 economists conducted from Aug. 25 to Aug. 30
  • Economy will expand 3.2% in 2018 and 3.5% in 2019, largely unchanged from previous
  • Chance of a recession happening over the next 12 months is 10 percent, according to 6 respondents
  • Q3 2017 GDP forecast at +5.3% y/y versus prior survey +3.9%
    • Q4 2017 GDP forecast at +3.3% y/y versus prior survey +3.2%
  • End-2017 CPI forecast unchanged at +9.4% y/y versus prior survey
    • End-2018 CPI forecast unchanged at +8% y/y versus prior survey
  • Turkey 1 week repo rate seen at 8.00% by end-4Q17, current rate is 8.00%
  • See graph of GDP forecasts
    • See graph of Turkey’s recession probability

Source Comment

“Economic growth will be strong enough, thanks to government’s sectoral stimulus which contributed to domestic demand,” wrote Enver Erkan, an analyst at Reel Kapital Securities in Istanbul, “Also, the contribution of European economies’ recovery will be positive via the net exports channel. We expect inflation to remain in double digits until the end of the year and decline to 9.4 percent in December through the base effect.”

Full Survey Results

2Q3Q4Q1Q2Q3Q4QAvg.Avg.Avg.
2017201720172018201820182018201720182019
GDP YOY%4.6%5.3%3.3%3.9%4.0%4.4%4.1%4.1%3.2%3.5%
 Previous survey4.8%3.9%3.2%3.8%4.0%4.4%4.2%3.9%3.2%3.6%
Private Cons. YOY%4.9%4.8%3.1%4.0%4.5%3.7%4.0%4.4%3.5%3.6%
 Previous survey5.0%4.7%3.3%4.0%4.5%4.1%4.3%4.3%3.6%3.8%
Gross Fixed Inv. YOY%2.3%2.5%1.5%2.7%3.0%2.9%2.9%2.4%2.7%2.5%
 Previous survey2.2%2.5%1.3%2.7%2.6%3.2%2.8%2.1%2.5%2.5%
Avg. CPI YOY%n/a10.3%9.9%8.0%7.5%8.5%8.5%10.6%8.1%7.9%
 Previous surveyn/a10.4%9.9%8.4%7.7%8.2%8.3%10.6%8.1%7.9%
Year-End CPI YOY%n/an/an/an/an/an/an/a9.4%8.0%7.2%
 Previous surveyn/an/an/an/an/an/an/a9.4%8.0%7.5%
PPI YOY%n/a15.3%13.0%7.4%8.3%9.1%9.0%14.7%8.5%7.8%
 Previous surveyn/a14.8%12.4%6.9%7.7%9.1%9.0%14.4%8.2%7.8%
IP YOY%n/a6.0%0.4%2.7%2.6%3.8%4.1%3.2%2.8%2.8%
 Previous survey3.9%5.7%3.3%2.4%2.6%4.1%4.3%3.4%3.0%3.2%
Unemployment rate10.5%10.9%11.7%11.7%10.5%10.8%11.2%11.3%10.9%10.6%
 Previous survey10.5%10.8%11.4%11.5%10.5%10.6%11.4%11.5%10.8%10.6%
Current Acct. % GDP-4.0%-4.1%-4.7%-4.6%-4.4%-4.5%-4.4%-4.4%-4.5%-4.7%
 Previous survey-4.0%-4.1%-4.7%-4.6%-4.4%-4.5%-4.1%-4.5%-4.5%-4.7%
Budget as a % GDPn/an/an/an/an/an/an/a-2.8%-2.4%-2.2%
 Previous surveyn/an/an/an/an/an/an/a-2.7%-2.3%-2.1%
3Q4Q1Q2Q3Q4Q1Q2Q3Q
201720172018201820182018201920192019
Repo Rate8.00%8.00%8.00%8.00%8.00%8.00%8.00%8.00%8.00%
 Previous survey8.00%8.00%8.00%8.00%8.00%8.00%8.00%8.00%8.00%
3-mo. TRLibor12.73%11.90%11.90%12.53%12.38%11.73%12.00%11.75%11.75%
 Previous survey12.40%11.75%11.90%12.52%12.33%10.90%12.00%11.75%10.88%
2-Year Note11.44%11.05%10.50%10.32%10.05%9.79%10.00%9.25%9.13%
 Previous survey10.90%10.88%10.41%10.22%9.84%9.00%8.88%8.75%8.63%
10-Year Bond10.73%10.50%10.46%10.25%10.13%9.99%9.97%9.93%9.90%
 Previous survey10.73%10.75%10.65%10.90%10.60%10.30%10.64%10.62%10.10%

NOTE: All figures are expressed as of the end of the quarter except for GDP.

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