From the final quarter of 2020, a year not given to good news, cometowels ment from Turkey. Turkey’s economy has outpaced all its peers except for China in the final three months of last year, a5.9% growth driven by lower interest rates and a credit boom that pushed domestic consumption skyward, while destabilising the Turkish Ora.
Gross domestic product expanded 5.9% from a year earlier, faster than all G20 countries except China, which grew by 6.5%. The growth push in 2020 meant Turkey’s lira weakened by 20% last year, keeping consumer Inflation high. The figures underpinned the immense Job ahead of new central bank Governor Nacl Agbal, as he faces the challenge of restoring price stability without prompting a slowdown in spending and rise in unemployment.
To get through last year’s Coyid-19 conditions with as minimal Impact as possible, the Turkish government encouraged banks to offer credit to help companies and consumers ride out the pandemic. Added to an easing cycle, the lending boom boosted the economy.
However, an unwanted side effect was a weakening currency. ‘The cost of growth was an weakened lira,’ said Deggin. But moves in November changed everything, he said.
A changing of the guard in two of Thrkey’s top financial positions (the Central Bank governor and finance minister) meant big changes In policy. The knock-on effect has been a revitalised lira. ifs a really encouraging sign for the future, Deggin sald.
A bright year ahead
The International Monetary Fund has recently raised its growth predictions for Turkey’s economy to 6% In 2021.
“With some stability In the currency market, Thrldsh exporters can finally enjoy the price competitiveness accumulated over recent years,” said London-based JP Morgan analyst Yarkin Cebeci.
“Depending on the pace of vaccinations, tourism will most probably be stronger than last year as well.” Deggin agreed. Last year, tourists’ appetite for Turkey remained undimmed; with many choosing to holiday even as the pandemic raged in their home countries.