Turkish Economy to See Growth Boosted by New IMF Deal in 2010

Posted on 14 January 2010

The Turkish economy is predicted to grow by around 5% this year. A whole slew of analysts and brokers at investment funds, research groups and banks have forecast growth of between 4 and 7%, with 5.2% being the average forecast from the reports I have read.

The International Monetary Fund, known for its bearish forecasts is forecasting growth of 3.7%.

One must wonder though, from such a drastically sharp recession as struck Turkey as it entered 2009, what kind of things will happen to bring such growth in 2010.

Well… a new deal with the aforementioned IMF might be a big step. Turkey has been putting off signing a deal with the fund, a: because it would have damaged Turkey’s growing prowess as a regional power, and, b: to see if it really needed the deal.

However, now that 2009’s figures are in and have been crunched, Turkish leaders and politicians are now hinting that a deal with the IMF for stand-by funding could be reached within a week.

This has already had an effect on the markets, with the Istanbul Stock Exchange hitting 54,115 points, the highest level for 2 ears last Tuesday, and the Turkish lira gaining a full cent on the US dollar, and going higher against GBP than it has been for several months.

On a longer term scale the stand-by agreement will increase Turkey’s credit rating if you like, because the IMF is now basically acting as a guarantor on any loans.

Therefore Turkey will be able to seek financing for infrastructure development and expansion, and for things like marketing campaigns to increase tourism. In other words: the stand-by agreement will allow Turkey to speculate in order to accumulate significant GDP growth in 2010.

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