World Bank has confidence in economic team’s policies: Lopez

Gonca Şenay- ANKARA

The World Bank has confidence in the policies of Türkiye’s new economic team, says Humberto Lopez, the bank's country director, adding that the economic outlook for the Turkish economy will improve in mid-2024.

Earlier in September, the global lender decided to more than double its funding for Türkiye to $35 billion over the next three years.

“With those funds, both public and private sector will be supported,” Lopez told daily Hürriyet. They particularly aim to facilitate exporters’ access to loans, he added.

One of the reasons for the World Bank’s decision to provide additional funding to Türkiye is the confidence in the new economic team’s policies, according to Lopez.

Several factors played a role in the bank’s decision to boost its exposure to Türkiye, he noted.

“The current road map for the economy and the macroeconomic adjustments that are being undertaken by Finance Minister Mehmet Şimşek and Central Bank Governor [Hafize Gaye] Erkan are increasing our confidence,” Lopez said.

The Turkish economy will take a sigh of relief in mid-2024, and the economy will emerge stronger, Lopez said.

“We forecast a growth rate above 3 percent. We are very optimistic about it and do not expect economic activity to deteriorate.”

In June, in its Global Economic Prospects report, the World Bank revised its GDP growth estimate for the Turkish economy for 2023 upwards from a previous 2.7 percent to 3.2 percent. The bank’s growth forecasts for 2024 and 2025 are 4.3 percent and 4.1 percent, respectively.

“There will be light at the end of the tunnel in the mid-2024. I am very optimistic about the outlook. I believe Türkiye will emerge from this difficult situation stronger.”

“I am saying this because of two reasons: The Turkish private sector and people are resilient. They have the experience from the past crises, and they can adapt. Also, we see improvements in the data regarding the economy.”

He recalled that two credit rating agencies have upgraded Türkiye’s outlook to stable from negative. “This is an important indicator.”

Lopez, however, said that lowering inflation will take time.

While commenting on the additional funds, Lopez stated, “We assessed the current situation and the needs and agreed that a new package worth $18 billion would be appropriate.”

Some $6 billion will be allocated to the public sector and $9 billion to the World Bank’s International Finance Corporation (IFC), Lopez said.

The World Bank is working together with the government on several key issues, including mitigating the effects of climate change and renewable energy, according to Lopez.

“We are also working on new projects concerning floods, drought and forest fires, as well as infrastructure.”

They are also working on projects for the private sector, Lopez said. “Particularly the support to be provided to exporters… We want to make it easier for exporters to access credit, which will be used for short-term financing.”