Turkey Economic Outlook. First quarter 2020

Summary

Recent policy impulses could support the acceleration in the economic activity further. We upgrade our GDP growth to 0.8% and 4% for 2019 & 2020 respectively with a higher support from Domestic Demand.

Key points

• Key points:
• Turkey’s recovery is accelerating. Some moderation in consumption, more signals on investment to catch-up.
• Temporary rise in inflation in 1Q20. We expect inflation to be 8.5% by end 2020 unless geopolitical shocks arise.
• Economic policies will be more supportive. The CBRT may continue to reduce policy rate to one digit at the end of 2020.
• We expect Fiscal Policy to be neutral with a Budget Deficit to GDP at near 3% in 2020.
• Complacency should be ruled out as lower than expected growth can trigger policy slippages.

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