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IMF raises growth forecast for the Turkish economy to 6% in 2021

The IMF thus raises the growth forecast for the Turkish economy by 1%. Turkey is one of the few countries whose GDP grew in 2020.

The IMF (International Monetary Fund) announced yesterday that it expects the Turkish economy to grow by around 6% in 2021, 1% more than the previous estimate made in October in its latest World Economic Outlook report, in light of the positive evolution of the economic data of the Eurasian country and the good progress of vaccination against the coronavirus in Turkey.

Inflation is expected to fall slightly in late 2021… and the deficit is projected to decline to 3.5% of GDP, largely reflecting declining gold imports and a modest recovery in tourism,” notes the IMF. “Employment is expected to continue to recover slowly as the pandemic subsides,” it adds.

Although the COVID-19 pandemic has caused – as in the rest of the countries – a halt in economic activity in Turkey and a drop in the level of employment during the second quarter of 2020, the IMF indicates that the stimulus promoted by the government Turkish led to a rapid recovery of the economy that was particularly felt in the 3rd quarter of last year.

This stimulus to the economy included an increase in credit lines through quick loans at low interest rates, as well as cuts in interest rates; according to the IMF, these measures contributed significantly to making Turkey one of the few countries that ended 2020 with positive economic growth.

Even so, the IMF points out several risks to the growth of the Turkish economy, such as an inflation that remains uncontrolled, the increase in dollarisation of the economy due to the depreciation of the Turkish lira, high imports, low foreign exchange reserves and high external financing needs.