Turkey chides IMF as int’l fund slashes growth outlook

ISTANBUL

AP photo

The International Monetary Fund will be “mistaken again” in its growth forecasts for Turkey, a top Turkish official has stated, after the IMF recently revised down its growth outlook for the country due to political uncertainty, security concerns and the loss in the lira’s value. 

The IMF downgraded its 2017 growth forecast for Turkey to 2.5 percent from 2.9 percent, while it kept 2018 forecasts unchanged at 3.3 percent, in its latest World Economic Outlook released on April 18. 

The Fund raised its 2017 forecast for the global economy, while also warning about rising protectionism. 

“In Turkey, after a sharp slowdown in growth in the third quarter of 2016, a modest acceleration in activity is projected, with growth reaching 2.5 percent in 2017 based on stronger net exports and a moderate fiscal stimulus,” stated the IMF. 

 The outlook is clouded by heightened political uncertainty, security concerns, and the rising burden of foreign-exchange-denominated debt caused by the lira depreciation, according to the IMF. 

Deputy Prime Minister Mehmet Şimşek criticized the revision early on April 19. 

“The IMF’s forecasts for Turkey’s economy will likely turn out to be wrong again,” Şimşek tweeted. 

The IMF raised its 2017 global growth forecast due to manufacturing and trade gains in Europe, Japan and China, but warned that protectionist policies threaten to choke off a broad-based recovery.

The IMF, whose spring meetings with the World Bank get underway in Washington this week, forecast in its latest World Economic Outlook that the global economy would grow 3.5 percent in 2017, up from its previous forecast of 3.4 percent in January. However, it also warned about rising protectionism.  

The Fund said chronically weak advanced economies are expected to benefit from a cyclical recovery in global manufacturing and trade that started to gain momentum last summer.

“The economic upswing that we have expected for some time seems to be materializing,” IMF chief economist Maurice Obstfeld wrote in the report.

The IMF lifted Japan’s 2017 growth projection by 0.4 percentage point from January, to 1.2 percent, while the eurozone and China both saw a 0.1 percentage point growth forecast increase to 1.7 percent and 6.6 percent, respectively.

Meanwhile, the IMF held its 2017 U.S. growth forecast steady at 2.3 percent, which still represents a substantial jump from 1.6 percent growth in 2016, partly due to expectations that President Donald Trump will cut taxes and increase government spending.

The IMF also revised Britain’s growth forecast to 2.0 percent for 2017, up a half percentage point from January.