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EU: Turkey’s Economy Recovered Faster Than Expected

EU: Turkey’s Economy Recovered Faster Than Expected

Saturday, 9 November, 2019 - 13:00
People shop in an old bazaar in Istanbul, Turkey (File Photo: Reuters)

The European Union changed its forecast for Turkey’s economic growth, raising its growth expectation for the country’s GDP from minus 2.3 percent to 0.3 percent.

The report entitled “Autumn 2019 Economic Forecast” expected the Turkish economy will grow 3.1 percent in 2020 and 3.5 percent in 2021.

The economy recovered faster than expected from last year’s currency crisis, supported by a large fiscal stimulus and strong growth contribution of net exports, according to the report.

The report also forecasted the unemployment rate to drop to 13.7 percent this year, 13.3 percent next year and 12.9 percent in 2021.

Turkey's consumer prices ended 2018 at 20.3 percent in December, then 19.71 percent in March 2019, and as the central bank continued to ease the tightened monetary policy, domestic exchange rates continued to improve and inflation fell to 15.71 percent in June.

Consumer Price Index is to stand at 15.3 percent in 2019, 10.3 percent in 2020 and 9.3 percent in 2021 according to the report's expectations.

The biggest drop in inflation came in September at 9.26 percent, a rate lower than the International Monetary Fund's (IMF) average consumer price forecast for 2019.

In last month's Global Economic Prospects report, the IMF predicted average inflation in Turkey would reach 15.7 percent, noting it will drop down to 12.6 percent in 2020.

Last week, the Turkish Central Bank has lowered its mid-point inflation forecast for end-2019 to 12 percent while keeping it unchanged at 8.2 percent for end-2020.

Inflation was seen at 5.4 percent at end-2021 and 5 percent in the medium term, Governor Murat Uysal told reporters at a news conference in Istanbul to present the bank’s quarterly inflation report.

Uysal said the figure will fluctuate between 11.2 percent and 12.8 percent through the end of the year with a 70 percent probability.

Meanwhile, the Turkish Treasury borrowed $494 million from domestic markets through two auctions.

Some $385.4 million in 12-month zero coupon treasury bill was sold in the first auction, adding that in the second auction, the Treasury issued five-year fixed coupon bonds totaling $108.6 million.

The ministry also issued Sukuk worth $299.46 million, which were settled with a maturity of October 30, 2024.

According to the ministry's borrowing strategy, the Treasury projects to hold 12 bond-auctions and a direct sale of lease certificates this October-December to borrow about $6.88 billion from domestic markets.

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