Turkey Economic Outlook 3Q18 - BBVA Research · BBVA Research – Turkey Economic Outlook 3Q18 / 12...

BBVA Research – Turkey Economic Outlook 3Q18 / 1

July 2018

TurkeyEconomic Outlook 3Q18

Key messages

Global expansion continues at a steady pace, but less synchronized.

Risks related to political uncertainty, vulnerabilities in emerging economies

and trade protectionism

After holding up in the first half of the year, soft landing of the Turkish

economy is now under way. We expect GDP growth of 3.8% in 2018 and

3.0% in 2019 as both monetary and fiscal policy will become more restrictive

Inflation reached worrying levels in June with continued deterioration in pricing behaviour and

exceptional food inflation. Assuming no additional negative currency shock, we estimate the year-end

inflation to be 14%

A comprehensive National Anti-inflation strategy should be urgently implemented and placed at the

top of the priority list. Monetary transmission mechanism should be enhanced by a sound fiscal policy

and the removal of distortions in the monetary transmission mechanism

The current account balance will start to correct soon but the recent figures remind us of the need for

structural measures to correct the problem

BBVA Research – Turkey Economic Outlook 3Q18 _/ 3

Contents

01

02

Global environment: Global growth continues,

but risks are intensifying

Turkey: Navigating a Soft Landing

03 Turkey: Baseline scenario

04 Turkey: Forecast table


01 Global environment:

Global growth continues,

but risks are intensifying


Global growth continues, but risks are intensifying

The pace of global expansion is

being maintained, but is less

synchronized

Growth is robust in the US due

to the fiscal stimulus and stable

in China, but it has declined in

Europe

01 Increased protectionism

At the moment, its impact

on growth is limited, but it

could be greater if the

measures under discussion

were to be implemented

02 Increase in the price of oil

Higher inflation and drag on

growth in oil-importing countries

03

Different pace of monetary

normalization in Europe and

the United States

Strengthening of the dollar

and tightening of global

financial conditions

04 More volatility in emerging

markets

Increased financial tensions due

to increased financing costs and

protectionist threats

05 Global risks are intensifying

The possibility of a trade war

comes together with greater

risks in emerging economies

and in Europe

06


Robust global economy despite growing uncertainty

Global growth continues,

supported by private

consumption and investment,

but with growing differences

by region

World trade continues to show

a positive trend, although it is

losing momentum and still

does not reflect

the protectionist escalation

Confidence indicators show

some moderation, but remain

at high levels

World GDP growth (Forecasts based on BBVA-GAIN, % QoQ)

Source: BBVA Research

0.4

0.6

0.8

1.0

1.2

Jun-1

3

Dec-1

3

Jun-1

4

Dec-1

4

Jun-1

5

Dec-1

5

Jun-1

6

Dec-1

6

Jun-1

7

Dec-1

7

Jun-1

8

CI 20% CI 40% CI 60%

Point Estimates Period average


Limited effect of approved tariff increases, but significant

if those being discussed are implemented

The tariff increases approved by

the US would have a limited direct

impact. Indirect effects, via

economic confidence and financial

channel, could be felt in 2H18

With a protectionist escalation,

the negative effect on growth

would also be significant in

the US

The effect, smaller in Europe,

would differ by country and would,

above all, affect Germany and the

countries in Eastern Europe

The growth of global GDP could

be reduced by around 0.2 pp just

due to the trade channel

Effect on GDP growth of US tariff increases

and the response by other countries (2018-19, pp)

Measures announced: tariff increase to 25% on steel, 10% on aluminium and 25% on Chinese imports for a value of US$50 billion.

Measures under discussion: Tariff increases up to 20% on cars and Chinese imports for a value of US$200 billion.


-0.45

-0.40

-0.35

-0.30

-0.25

-0.20

-0.15

-0.10

-0.05

0.00

Current measures Measures under discussion

World US China Eurozone


Fed and ECB return to conventional monetary

policy each at a different pace

Gradual ending of QE

between September

and December 2018

Reduction of US$450

billion in 2018

The pace of rate

hikes accelerates

in 2018

Delay in rate hikes

until September 2019

0.75%

1.5% 2.00%

3.25% 0.55%

2016 2017 2018 2019

0% 0% 0%

0.25%

2016 2017 2018 2019

Assessment Interest rates



The strength of the US dollar and higher interest

rates are causing an adjustment in emerging

markets

The most vulnerable countries are

those with the greatest trade

deficit and the greatest need for

external financing

Shift towards a tightening of

monetary policy in emerging

countries (except China) to avoid

further depreciation of their

currencies

The increase in financial tensions

also reflects the intensification of

trade disputes

EUR-USD exchange rate and BBVA index of

financial tensions in emerging markets

Source: BBVA Research based on Bloomberg

1.00

1.05

1.10

1.15

1.20

1.25

1.30

1.35

1.40-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

Ma

r-1

3

Sep

-13

Ma

r-1

4

Sep

-14

Ma

r-1

5

Sep

-15

Ma

r-1

6

Sep

-16

Ma

r-1

7

Sep

-17

Ma

r-1

8

Financial stress in emerging marketsEURUSD (RHS, inverted)


Unlike previous episodes, EM outflows

have crept in slowly yet persistently

Outflows from EM in different episodes (cumulated flows in different episodes, % AUM)

Source: BBVA Research, Bloomberg

GIF flows to EM (weekly flows, 4w moving average, % AUM)

Early in the quarter, tightening of global funding led to outflows from bond funds, while the escalation of trade tensions, affecting particularly Asia, boosted

outflows from equity funds

The accumulation of sources of risk during the quarter is behind the persistence of the recent EM

sell-off. Outflows since April have already surpassed those registered after US elections

-1.00

-0.75

-0.50

-0.25

0.00

0.25

0.50

0.75

1.00

Dec-1

4

Ma

r-1

5

Jun-1

5

Sep

-15

Dec-1

5

Ma

r-1

6

Jun-1

6

Sep

-16

Dec-1

6

Ma

r-1

7

Jun-1

7

Sep

-17

Dec-1

7

Ma

r-1

8

Jun-1

8

Equity

Bonds

-3.5%

-3.0%

-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

1 2 3 4 5 6 7 8 9 10 11 12 13

weeks

Taper Tantrum (May 2013) China's concerns (Aug 2015)

US elections (Nov16) Current episode


Protectionism and political factors lead

to a growing risk aversion

Investor sentiment has shifted

from risk-taking mode (and even a

certain complacency) to one of

risk aversion

The change is causing a rotation

of flows between assets: from

emerging markets to developed

ones, and from equities to bonds

Trade tensions could lead to an

environment of flight towards

quality

Risk appetite/aversion indicator


-1.5

-1.0

-0.5

0.0

0.5

1.0

Jan-1

7

Apr-

17

Jul-1

7

Oct-

17

Jan-1

8

Apr-

18

Jul-1

8

Average from 2014 (max and min)

"Risk-on mood"

"Risk-off mood"


12

Global Investment Funds to EM (as % of Assets Under Management)

EM funds registered portfolio

outflows in the 2Q18, similar to

the sell-off led by Trump`s victory

due to global factors

We expect outflows to accelerate

in the second half of the year.

Thus, 2018 would be the turning

point for EM after two consecutive

years of strong inflows

Risks are tilted to the downside

(higher outflows) in line with rising

global risks

What to expect about portfolio flows to EM?

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

Se

p-1

3

Dec-1

3

Ma

r-14

Ju

n-1

4

Se

p-1

4

Dec-1

4

Ma

r-15

Ju

n-1

5

Se

p-1

5

Dec-1

5

Ma

r-16

Ju

n-1

6

Se

p-1

6

Dec-1

6

Ma

r-17

Ju

n-1

7

Se

p-1

7

Dec-1

7

Ma

r-18

Ju

n-1

8

Se

p-1

8

Dec-1

8

-8%

-4%

0%

4%

8%

12%

2013 2014 2015 2016 2017 2018



Stable growth in the US, but a slowdown in other areas


2018

2.8 2019

2.8

USA

2018

2.6 2019

2.0

Mexico

2018

0.9 2019

2.1

South America

2018

3.8 2019

3.0

Turkey

2018

2.0 2019

1.7

Eurozone

2018

6.3 2019

6.0

China

Down

Up

Unchanged

2018

3.8 2019

3.8

World


Global risks: the main one is a trade war, but those

associated with emerging economies and Europe are increasing


USA

EZ

CHINA

Sh

ort

-te

rm p

rob

ab

ilit

y

Severity

EM

CHINA

High indebtedness: more contained but still high

Protectionism: upwards (retaliation) with possible impact on

domestic policies (financial stability, reforms)

USA

Protectionism: upwards

The Fed exit strategy: high. Aggressive rate hikes in the face of a

temporary increase in inflation

Signs of over-valuation of certain financial assets

EUROZONE

Political uncertainty: on the upswing, led by Italy. Brexit: risk of a

rough departure

Protectionism: on the upside with a focus on the auto sector

Exit strategy by the ECB: on the downside (delay of rate hikes)

EMERGING ECONOMIES

Upward. Global risks and domestic vulnerabilities in some countries

are raising the risk of a systemic crisis


02 Turkey:

Navigating a Soft Landing


Rebalancing is already underway

The level and the duration of

adjustment in the economy will

depend on the policy reactions in

the short term, which should focus

on engineering a soft landing

01

Turkish financial assets remain

under stress

Concerns over increasing

protectionism in global markets

maintain the EM sell-off pressures.

Idiosyncratic factors also weigh

02

Inflation reached high levels

Consumer prices reached

alarming levels on last year´s

loose policies, high inertia and

second round effects from

exchange the rate depreciation

03

Monetary policy needs to be

tighter

Monetary policy will be

maintained tight to fight inflation,

anchor increasing expectations

and restore credibility. Cooling

down the overheating is urgent

04

Fiscal policy should complement

Monetary Policy

Anti-inflation strategy should be

comprehensive and balanced.

Both fiscal policy and monetary

policy should complement each

other to fight inflation

05

Current account deficit will benefit

from the adjustment in the

economy

The current account adjustment will

become more obvious from 2019

onwards

06

Challenging times ahead to be tackled with policy determination



Turkish Lira vs USD (Level)

Turkish financial assets remain under pressure,

waiting for clearer signals on the new direction of

policies to correct double-digit inflation and a

high current account deficit

The Turkish Lira has become one of the worst performers

among EM currencies since March, depreciating 28% since

then. The sell-off pressure over EM assets pose special

risks as Turkish financial assets show a higher “beta”

Currency depreciation in emerging countries (*)

(percentage change)

(*) A positive value indicates a depreciation of the local currency

Source: Bloomberg

-10

0

10

20

30

40

50

Arg

entina

Tu

rkey

Bra

zil

Hu

nga

ry

Pola

nd

Ch

ile

Co

lom

bia

India

Indon

esia

Me

xic

o

Ma

laysia

Peru

Ukra

ine

Ru

ssia

Last three months Year-to-date

Emerging Markets woes, macroeconomic imbalances and uncertainty

about policies lead to sharp reaction of Turkish financial assets

3.7

3.8

3.9

4

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.9

Jan-1

8

Feb

-18

Ma

r-1

8

Apr-

18

Ma

y-1

8

Jun-1

8

Jul-1

8


Turkey: Presidential Elections (% Total votes)

President Erdogan surprised in the Presidential

election obtaining the majority in the first

round. He will become an Executive President

for the next five years

The Government`s Party coalition (AKP+MHP) obtained

the majority in the Assembly. They would need some

forces from the opposition to call a referendum (360 MPs)

or approve directly Constitutional reforms (400 MPs)


Turkey: MPs Distribution in Parliament* (seats)

*People’s Alliance: AK Party and MHP – 344 MPs.

*Nation’s Alliance: CHP, IYI, SP – 189 MPs.

47%

28%

13% 10%

53%

31%

7% 8%

0

10

20

30

40

50

60

Erdogan Ince Aksener Demirtas

Average June Polls Official Results

presidential threshold

290

49

144

42

67

AK Party MHP CHP IYI HDP

Turkey’s Elections: President Erdogan and

Government Coalition won the elections


Source: CBRT, TURKSTAT, BBVA-Research Turkey

The economic activity soft landing is already underway

and will accelerate in the second part of the year

Turkey: GDP Monthly Indicator (%YoY mov. Avg. 3m)

Soft data (confidence) and first

hard data releases from the

second half of the year (imports

and electricity production) signal

that economic adjustment is

accelerating

The cool-down in economic

activity could become much

clearer from now onwards. The

high base effect and lagged

response to the tightening of

financial conditions will affect

domestic demand

The level and the duration of

adjustment in the economy will

depend on the policy decisions

taken in the short term and global

financial conditions

-4%

-3%

-1%

1%

2%

4%

5%

7%

8%

10%

11%

13%

14%

Jun-1

4

Sep-1

4

De

c-1

4

Ma

r-1

5

Jun-1

5

Sep-1

5

De

c-1

5

Ma

r-1

6

Jun-1

6

Sep-1

6

De

c-1

6

Ma

r-1

7

Jun-1

7

Sep-1

7

De

c-1

7

Ma

r-1

8

Jun-1

8

GDP Growth

BBVA-GB GDP Growth (Monthly)

GDP growth nowcast

May : 5.7% (50% of inf.)

June: 5.3% (44% of inf.)


Growth in private consumption

remained solid in 2Q but the first

signs of slowdown have been

clearer since May

The adjustment in investment is

much more apparent with risks

clearly on the downside in the

short term


Turkey: Private Consumption (%YoY, mov. Avg. 3m)

Turkey: Total Investment (%YoY mov. Avg. 3m)

Turkey: Net Exports* (%Contribution to GDP Growth)

*June Nowcast uses internal estimates for trade balance and BOP

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

Ju

n-1

4

Se

p-1

4

Dec-1

4

Mar-

15

Ju

n-1

5

Se

p-1

5

Dec-1

5

Mar-

16

Ju

n-1

6

Se

p-1

6

Dec-1

6

Mar-

17

Ju

n-1

7

Se

p-1

7

Dec-1

7

Mar-

18

Ju

n-1

8

Hu

nd

red

s

Cons. Growth

BBVA-GB Cons Growth (Monthly)

Cons. Growth nowcast

April: 10.1% (100% of inf.)

May: 8.3% (100% of inf.)

June: 6.1% (67% of inf.)

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Ju

n-1

4

Sep

-14

De

c-1

4

Mar-

15

Ju

n-1

5

Sep

-15

De

c-1

5

Mar-

16

Ju

n-1

6

Sep

-16

De

c-1

6

Mar-

17

Ju

n-1

7

Sep

-17

De

c-1

7

Mar-

18

Ju

n-1

8

Hu

nd

red

s

Inv. Growth

BBVA-GB Inv. Growth (Monthly)

Inv. Growth Nowcast

April: 8.3% (100% of inf.)

May: 6.0% (100% of inf.)

June: 4.1% (50% of inf.)

-6%

-4%

-2%

0%

2%

4%

Ju

n-1

4

Sep

-14

De

c-1

4

Mar-

15

Ju

n-1

5

Sep

-15

De

c-1

5

Mar-

16

Ju

n-1

6

Sep

-16

De

c-1

6

Mar-

17

Ju

n-1

7

Sep

-17

De

c-1

7

Mar-

18

Ju

n-1

8

Hu

nd

red

s

Net Exp. Contribution

BBVA-GB Net Exp Contribution (Monthly)

Net Exp. Contribution Nowcast

April: -2.1%

May: -1.0%

June: 0.2%

The adjustment in imports and

some recovery in exports will

provide some cushion from the

external demand

Consumption and Investment are already adjusting with

external demand providing some buffer


Source: CBRT, TURKSTAT, BBVA Research Turkey

Turkey: CPI and Core Inflation (YoY)

6%

7%

8%

9%

10%

11%

12%

13%

14%

15%

16%

Jun-1

5

Oct-

15

Feb

-16

Jun-1

6

Oct-

16

Feb

-17

Jun-1

7

Oct-

17

Feb

-18

Jun-1

8

CPI Core

Turkey: FX Pass-through on CPI Items*

Housing Furniture

Health

Entertainment

Transportation

Processed Food

Clothing

Education

Hotel

Others

Energy

0

5

10

15

20

25

30

35

40

0 2 4 6 8 10 12 14C

um

ula

tive

FX

Pa

ss-T

hro

ug

h (

%)

Months taken to complete FX pass-through

*Bubble size corresponds to the weight of each item in FX pass-through to CPI

Headline and Core inflation are reaching alarming levels

due to both demand and supply factors. There is an

urgent need to design a comprehensive strategy to

break this price spiral

Exchange rate pass-through has been broad-based but

uneven. The maximum impact is reached about seven

months after depreciation, so there are still extra effects

to come before year-end correction

Inflation has reached alarming levels.The pass-through

from the exchange rate is broad-based but uneven


CBRT Interest Rates (Annual Level, %)

Source: CBRT and BBVA Research Turkey

789

10111213141516171819202122

Jan-1

7

Feb

-17

Ma

r-1

7

Apr-

17

Ma

y-1

7

Jun-1

7

Jul-1

7

Aug-1

7

Sep-1

7

Oct-

17

No

v-1

7

De

c-1

7

Jan-1

8

Feb

-18

Ma

r-1

8

Apr-

18

Ma

y-1

8

Jun-1

8

CBRT One-Week Repo CBRT LLW CBRT Funding Cost

Real Policy Rates (ex-ante with 12m ahead exp. & ex-post with current inflation)

The CBRT has increased its funding rate by 500 bps to

17.75%, simplified its policy framework and provided

some supporting liquidity measures since its March

meeting

Real interest rates (ex ante) are now more appropriate for

coping with the inflation problem. They should be maintained

tight until inflation turns back to single digits and inflation

expectations start to move to more reasonable levels

-4%

-2%

0%

2%

4%

6%

8%

Jan-1

0

Jul-1

0

Jan-1

1

Jul-1

1

Jan-1

2

Jul-1

2

Jan-1

3

Jul-1

3

Jan-1

4

Jul-1

4

Jan-1

5

Jul-1

5

Jan-1

6

Jul-1

6

Jan-1

7

Jul-1

7

Jan-1

8

Jul-1

8

CBRT Ex-Ante CBRT Ex-Post

The Central Bank (CBRT) stayed on hold in July despite market

expectations of tightening (100 bps). We expect the CBRT to tight later,

depending on the degree of fiscal consolidation and currency volatility


-8%

-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

De

c-1

2

De

c-1

3

De

c-1

4

De

c-1

5

De

c-1

6

De

c-1

7

De

c-1

8

De

c-1

9

De

c-2

0

Budget Balance Primary Balance Real Gov. Exp.

Financial markets’ doubts about

fiscal policy pose additional risks

to the economy

High real government spending,

pre-election transfers and extra

defence spending have

contributed to a deterioration of

the fiscal balance to 2% of GDP

and a decrease in the primary

balance to negative

Given the increase in interest

payments in the coming period,

the authorities should design a

strategy to correct the primary

component of the budget balance

The strategy should aim to

contribute to the rebalancing in the

economy

A fiscal consolidation strategy should lead Budget Balance to

return to the traditional 1% deficit of GDP

CG Budget Balance and MTP Forecasts Balance in % of GDP (LHS) & Real Government Spending YoY (RHS)

Government OLD MTP Forecasts

Real Government

Spending

6-7% YoY

BBVA Forecasts

Real

Goverment

Expenditures

4-5% YoY


Central Government Balance (% GDP)

The new medium-term plan should be designed to help to rebalance

the economy and initiate a path to disinflation

-2.5

-2

-1.5

-1

-0.5

0

0.5

1

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

Fiscal Impulse Overall Balance Cyclically Adjusted Balance

The deterioration of the public

balance has been structural rather

than cyclical (i.e. the balance has

deteriorated despite extraordinarily

high growth and inflation)

The fiscal consolidation strategy

should aim to increase structural

primary balance and contribute to

more balanced growth (investment

rather than consumption) :

Spending: Current spending should

be adjusted, while some public

investment could be postponed.

This could be offset by changing

tax incentives in favor of private

investment

Revenues: Direct taxes and

transfers should be adjusted

accordingly as indirect taxes would

hit inflation. Structural measures to

increase the tax base (i.e. reducing

the size of the “informal” economy)


Current Account Balance 12M sum, % GDP

Source: CBRT, Turkstat and BBVA Research Turkey

The CA deficit ballooned again on the cyclical boost. The soft landing

will contribute to adjustment, but the problem of structurally low

savings remains

-10%

-8%

-7%

-5%

-4%

-2%

-1%

1%

Ma

y-0

7

No

v-0

7

Ma

y-0

8

No

v-0

8

Ma

y-0

9

No

v-0

9

Ma

y-1

0

No

v-1

0

Ma

y-1

1

No

v-1

1

Ma

y-1

2

No

v-1

2

Ma

y-1

3

No

v-1

3

Ma

y-1

4

No

v-1

4

Ma

y-1

5

No

v-1

5

Ma

y-1

6

No

v-1

6

Ma

y-1

7

No

v-1

7

Ma

y-1

8

CAB Net Gold Structural CAB

Current account deficit (CAD)

reached 6.6% of GDP in May, the

highest figure since March 2014.

We believe that it will start to

correct as soon as domestic

demand adjusts

The recent deterioration is mostly

cyclical, as the structural balance

remains at around 4%. However, it

has contributed to exacerbating

the structural problem of the

balance of payments

The problem of low savings

remains, and explains most of the

structural external imbalance

Adjustment of the low rate of

savings will come from structural

measures to enhance private

savings (quantities) or higher real

interest rates (prices)


03 Turkey Baseline Scenario:

Navigating the necessary

Soft Landing


The cool-down in economic activity will become much clearer

in the second half of this year prompted by a large statistical

base effect and the tightening of external and local conditions

We forecast 2018 GDP growth to be slightly below

4% in 2018 and 3% in 2019. The economy will

subsequently recover to its potential levels

2017 2019 2018

3.0%

(now)

4.5%

(before) 3.8%

(now)

4.0%

(before)

7.4%

Tighter global financial conditions, monetary policy tightening and the

expected consolidation plan will lead the economy to a soft landing


We expect the exchange rate to remain at current levels

at the end of this year. Although the lira remains

undervalued, continuing high inflation and an

unsupportive global environment will limit the correction

Inflation Forecast (3m YoY)

We revise our inflation estimate upwards to 14% for 2018 year-end

and expect it to stay very near to two digits during the next year

Annual headline inflation adjusted

from exchange rate pass-thru is

now close to 11%, compared to

the levels fluctuating around 6% in

2011-2016

Continued deterioration in pricing

behavior seems to strengthen

inertia via second round price

effects, cost push factors and

expectations in the last couple of

years

This unhealthy trend requires

fiscal and monetary policies to act

accordingly to fight against

inflation 4%

6%

8%

10%

12%

14%

16%

18%

Dec-1

6

Feb

-17

Ap

r-1

7

Ju

n-1

7

Au

g-1

7

Oct-

17

De

c-1

7

Feb

-18

Apr-

18

Ju

n-1

8

Au

g-1

8

Oct-

18

De

c-1

8

Feb

-19

Ap

r-1

9

Ju

n-1

9

Aug-1

9

Oct-

19

De

c-1

9


Monetary policy will remain tight, with upside risks

depending on fresh bad news on inflation,

continuing deteriorating expectations or further

supply shocks from exchange rate depreciation

We expect the exchange rate to remain at current levels

at the end of this year. Although the lira remains

undervalued, ongoing high inflation and unsupportive

global environment will limit the correction

Monetary Policy Forecasts % CBRT Funding Cost

Exchange Rate Forecasts USDTRY Level

2.62.8

33.23.43.63.8

44.24.44.64.8

55.25.45.65.8

6

De

c-1

5

Jun

-16

De

c-1

6

Jun-1

7

De

c-1

7

Jun

-18

De

c-1

8

Jun

-19

De

c-1

9

Monetary policy will be “tight”, reacting to inflation realizations,

expectations and exchange rate deviations from the expected path

6%

8%

10%

12%

14%

16%

18%

20%

22%

24%

De

c-1

5

Ap

r-1

6

Aug-1

6

De

c-1

6

Ap

r-1

7

Au

g-1

7

De

c-1

7

Ap

r-1

8

Au

g-1

8

Dec-1

8

Ap

r-1

9

Au

g-1

9

De

c-1

9


04 Turkey:

Forecast table


(f) Forecast.

2016 2017 2018 (f) 2019 (f)

GDP (%) 3.2 7.4 3.8 3.0

Private consumption (%) 3.7 6.1 4.3 2.5

Public consumption (%) 9.5 5.0 2.6 2.0

Investment in fixed capital (%) 2.2 7.3 2.1 2.5

Exports (%) -1.9 12.0 5.0 5.5

Imports (%) 3.7 10.3 4.4 3.1

Unemployment rate (average) 10.9 10.9 10.3 10.9

Inflation (end of period, YoY %) 8.5 11.9 14.0 10.0

CBRT funding rate (end of period, YoY %) 8.31 12.75 18.75 16.0

Exchange rate (USDTRY, end of period) 3.52 3.77 4.80 5.0

Current account balance (% of GDP) -3.8 -5.5 -6.6 -5.4

Central government budget balance (% of GDP) -1.1 -1.5 -1.9 -2.0

Turkey Baseline Scenario


This report has been produced by the Turkey, China and Big Data Unit Chief Economist for Turkey, China and Big Data Unit

Álvaro Ortiz

[email protected]

Seda Güler Mert

[email protected]

+90 212 318 10 64

Adem İleri

[email protected]

+90 212 318 10 63

Yiğit Engin

[email protected]

+90 212 318 10 60

Serkan Kocabas

[email protected]

+90 212 318 10 57

Ali Batuhan Barlas

[email protected]

+90 212 318 10 67

Deniz Ergun

[email protected]

+90 212 318 10 59

Pelin Ayrancı

[email protected]

+90 212 318 10 58

With the collaboration of Global Economic Situations Miguel Jiménez

[email protected]

FOR ANY QUERIES PLEASE APPLY TO: BBVA Research: Calle Azul, 4. Edificio de la Vela - 4ª y 5ª plantas. 28050 Madrid, Spain. Tel.+34 91 374 60 00 and +34 91 537 70 00 / Fax+34 91 374 30 25 -

[email protected] www.bbvaresearch.com

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Rafael Doménech

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July 2018

TurkeyEconomic Outlook 3Q18

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