World Bank revises up Turkey growth forecast

ISTANBUL

The World Bank has raised its gross domestic product (GDP) growth forecast for Turkey in 2021 to 8.5 percent.
In its July projection, the bank had pointed to an expansion of 5 percent, according to Europe and Central Asia Economic Update released on Oct. 5.

“Turkey’s economy was one of the few to avoid a contraction last year, partly owing to substantial credit expansion.

Growth strengthened further in the first half of 2021, as the deployment of vaccines permitted relaxing COVID-19 restrictions, supporting robust services activity and retail sales,” read the report.

“Activity was also fueled by a sharp rebound in industrial production and goods exports to the euro area as external demand firmed. Meanwhile, new export orders have remained solid in the third quarter. Tourist arrivals have firmed somewhat although international tourism remains depressed relative to pre-pandemic levels,” it added.

Growth is projected to accelerate to an eight-year high in 2021, reaching 8.5 percent, with export growth surging in tandem with firming external demand, particularly from the euro area, according to the report.

On the other hand, inflationary pressures could continue to build in the near term, it warned.

A combination of a weak lira and rising international commodity prices has raised headline inflation to nearly 20 percent.

Turkey recorded a GDP growth of 1.8 percent last year, despite the pandemic. In the first quarter of this year, growth rate rose to 7 percent. The Turkish economy grew by 21.7 percent in the second quarter – the second highest among G-20 countries.