ISTANBUL: The economy of Turkey is expected to have expanded 7.1 per cent in the first quarter of fiscal year 2022 that was possible only through strong exports of the country. But growth was seen dropping to 3% for the full-year.
Turkish Statistical Institute (TSI) stated that Turkey’s economy bounced back from the COVID-19 pandemic to grow 11 per cent in 2021, its highest in a decade, after narrowly expanding in 2020.
It is expected to have continued the strong performance in the first quarter of 2022, despite inflation soaring to 70 per cent in April and a widening current account deficit due to the surge in global commodity prices.
According to an estimate of economists the GDP growth in the first quarter was 7.1 per cent, with forecasts ranging between 1.8 per cent and 8.0 per cent.
President Tayyip Erdogan is implementing an economic plan that prioritises growth, employment, investment and exports driven by a series of unorthodox interest rate cuts which have brought the central bank’s policy rate down to 14 per cent.
Paradoxically, economists say the rate cuts could hamper growth in 2022 after they triggered a currency crisis and sent inflation soaring.
The estimate of economists for GDP growth in 2022 stood at 3.0 per cent, in a range of 0.3 per cent and 5.0 per cent.
The deceleration in economic activity continues, growth-supportive policies help prevent a relatively faster slowdown.
“Larger negative real interest rates, recent push in credits and loose fiscal policy remain supportive in the short term.
Also, the recent performance in both exports and tourism show resilience which surprise on the upside,” it said in a note.
But financial volatility and uncertainty in global markets and their potential impact on external demand create downside risks to growth in the near term.
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