IMF ups 2018 growth forecast for Turkey, revises down 2019 figure

WASHINGTON

The International Monetary Fund (IMF) has revised up its forecast for the 2018 Turkish economic growth to 4.4 percent, but its 2019 forecast was down to 4 percent for 2019 in its latest World Economic Outlook.

Turkey’s economy is projected to grow above potential, buoyed by improved external demand conditions and supportive policies on multiple fronts—expansionary fiscal policy, state loan guarantees, pro-cyclical macro-prudential policy, and an accommodative monetary stance, the IMF said in its outlook on April 17, which was released as thousands of global finance officials were gathering in Washington for the IMF and World Bank spring meetings this week.

“Growth is projected at 4.4 percent in 2018 and 4 percent in 2019,” it added.

In its January upgrades, the IMF forecasted a 4.3 percent growth for Turkey in 2018 and 2019 for each.

The IMF also highlighted some risks for the Turkish economy.

In Turkey, limiting balance sheet currency mismatches and the high exposure to foreign exchange risk are urgent priorities, especially with monetary policy normalization under way in the United States and the United Kingdom (and the resulting possibility of a shift of capital flows away from emerging market economies), the IMF warned.

Moreover, given that sudden re-pricing of term premiums remains a distinct possibility (as discussed in the “Risks” section) and that portfolio shifts could occur, it is important to mitigate rollover risk by avoiding excessive reliance on short-term borrowing, it added.

The IMF kept its 2018 and 2019 global growth forecasts unchanged at 3.9 percent for both years after upgrades in January.