Goldman Sachs lifts growth forecast for Turkish economy

ISTANBUL

Goldman Sachs has revised upwards its growth forecast for the Turkish economy for 2022 after official data showed earlier this week that the economy expanded 7.6 percent in the second quarter.

The investment bank raised its forecast from a previous 3.5 percent to 5.5 percent.

It noted that the Central Bank’s foreign currency reserves increased significantly since the third week of July and said in that it was revising upwards its GDP growth estimate for the Turkish Economy.

“The additional funding implies that the need to tighten policy to avoid an external funding gap has declined substantially,” Goldman Sachs said.

The bank also updated its current account deficit forecast. It expects the country’s current account deficit to be $46 billion this year, up from a previous estimate of $36 billion.

This week, rating agency Moody’s also revised its growth forecast upwards for the Turkish economy for 2022 from a previous 3.5 percent to 4.5 percent in its latest edition of the Global Macro Outlook 2022-2023 report.
It expects growth to slow to 2.3 percent in 2023.

Meanwhile, Robin Brooks, the chief economist at the International Institute of Finance (IIF), said that Türkiye’s net exports have contributed positively to GDP for the past 2 years, a sign how competitive the manufacturing and tourism sectors are.
“All that’s needed to unleash a massive boom is a nod to markets. Even a small shift in policy toward orthodoxy will unleash a boom,” Brooks wrote on Twitter.

The economic growth accelerated from 7.5 percent in the first quarter to 7.6 percent in the second quarter, the Turkish Statistical Institute (TÜİK) reported on Aug. 31. The quarter-on-quarter growth also gathered pace from 0.7 percent to 2.1 percent.