International ratings agency Fitch is forecasting that Turkey’s economy will start growing from the 3rd quarter of this year.
The Fitch Ratings’ sovereign team director Director Douglas Winslow said Turkey’s economic growth rate is expected to reach 4.5 percent in 2021.
“In the first quarter of this year — before the coronavirus shock — economic growth had accelerated to above 6% … we now anticipate a very sharp contraction in the second quarter, flatter growth in the third quarter, and then recovery in the fourth quarter, as activities begin to normalize after the partial lockdown,” Winslow said, in response to questions put to him by the state-run Anadolu Agency.
Winslow said that despite a global contraction, Turkey’s lower interest rate and recovery in private bank lending, which had created strong momentum early in the year, helped Fitch’s updated growth forecast of 0.8 percent for Turkey’s GDP growth in 2020.
Last September The Central Bank of the Republic of Turkey Bank forecast 8.2% inflation for this year. Fitch also projects a 100 basis point cut in Turkey’s interest rates to 8.75% at the end of the year, Anadolu reported.
According to Fitch, Turkey’s net exports will have a negative impact on GDP growth this year as the rating agency forecasts the Eurozone to shrink by 4.2 this year.
As Fitch forecasts the eurozone to shrink by 4.2% this year, Turkey’s reduced net exports will have a negative impact on GDP growth this year but corresponding lower imports are likely to outweigh the effect on the Turkish economy, Winslow added.
Credit rating agency Moody’s revised its prediction for Turkey’s GDP from 3% growth in 2020 to a 1.4% contraction.
Turkey’s exports amounted to $29.4 billion, up 4.3 percent in the first two months of 2020, on a yearly basis despite economic slowdown during the same period. According to Turkey’s Customs and Trade Ministry, Turkey’s imports increased to $21.4 billion in March, a 12.77 percent year-on-year increase, and Turkey’s exports in March totaled $15.5 billion, an 8.01 percent rise compared with the same month in 2017.
The Turkish lira lost ground to the U.S. dollar, dropping 6.7510 to the dollar on Monday – a level last seen in August 2018. This is due to the Covid-19 pandemic which hit manufacturing and trade in the country.
The Turkish currency has lost about 12% of its value against the dollar this year. Coronavirus killed 574 people and confirmed cases reached to 27069, Turkey’s Health Minister Fahrettin Koca tweeted.