Posted on 06 October 2014
Turkey’s economy has grown by six per cent on average since 2010 and is set to continue growing albeit at a moderate pace, according to a report by the International Monetary Fund.
An IMF team visited Turkey between September 11 and 24 and carried out its annual evaluation of the economy. The resultant report noted that the Turkish economy recovered swiftly from the global financial crisis and unemployment reached its lowest level in the last decade. More recently, the Turkish authorities effectively contained the fallout from heightened domestic uncertainty and financial market volatility.
The IMF also stated that in 2014, GDP is expected to grow at three per cent, driven by public sector support, net exports and a mild revival of private consumption in the later part of the year. Also of note was that the financial system remains well capitalized, with capital adequacy ratios high on average, and mostly based on high quality capital.
Areas that could hold the economy back include low national saving and competitiveness challenges, said the IMF, which is advising a change in policies and tighter fiscal stance to facilitate Turkey achieving its goals.
Meanwhile, international credit rating agency Fitch affirmed in October Turkey‘s credit rating as “BBB-” with a stable outlook. “The outlook on Turkey‘s sovereign ratings are finely balanced. Turkey’s upgrade to investment grade in November 2012 owed much to a demonstrable track record of fiscal consolidation and a reasonably healthy banking system,” said the agency. “However, Turkey’s buffers against potential volatility in global investor risk appetite remain relatively thin in the light of the capacity for domestic policy reversals, doubts over the durability of economic rebalancing and rising geopolitical risk.”