ISTANBUL (Reuters) - Turkey’s economy beat the government’s growth forecast in 2017 but will miss it this year and next unless additional steps are taken, according to a Reuters poll.
Growth in 2017 is estimated to have been 6.5 percent, according to the poll of 43 economists, higher than the government’s forecast of 5.5 percent and the previous Reuters poll in October, which predicted 5.0 percent.
Under its medium-term economic program, which is updated annually, the government sees annual gross domestic product (GDP) growth at 5.5 percent between 2017 through 2020, but the Reuters poll estimates growth for 2018 and 2019 at just 4.0 percent and 3.8 percent, respectively.
Turkey’s economy grew 11.1 percent year-on-year in the third quarter last year, its fastest in six years, supported by government stimulus measures encouraging borrowing and spending.
“Economic growth up to 7 percent at end-2017 is not a surprise any more since preliminary and disclosed data on the fourth quarter are quite strong. Growth was also strong with the support of government incentives and tax reductions,” said Haluk Burumcekci, an economist who runs Burumcekci Consulting in Istanbul.
“However, I expect growth to ...come down toward 4 percent in 2018 due to a slowdown in the credit growth rate and base effects. Additional incentives by the government may lift (this)”
After hitting a 14-year high just below 13 percent in November, Turkey’s inflation completed the year at 11.92 percent in December, data showed.
The Reuters poll predicted inflation would remain high but fall to 9.3 percent by the end of this year and 8.5 percent by end-2019, above the government’s targets of 7.0 percent and 6.0 percent respectively.
(For other stories from the Reuters global long-term economic outlook polls package see)
Reporting and polling by Sarmista Sen and Nevzat Devranoglu; Writing by Ezgi Erkoyun; editing by John Stonestreet