Economic Growth in Turkey
Based on the current economic program of Turkey’s government, it’s clearly stated that there will be optimistic economic growth in Turkey in the coming years. Also, the supportive fiscal posture will continue to deliver numerous investments and many other opportunities to investors and ex-pats.
Turkey’s Ministry of Treasury and Finance anticipates the country’s gross domestic product (GDP) to rise by more than 5% this year (2021), aided by export growth of between 16 and 20% after a pandemic struck in 2020.
Due to the so-called base effect, the economy would increase by double digits in the second quarter of 2021, Treasury and Finance Minister Lutfi Elvan stated in a broadcast interview on CNN Turk late Thursday. Elvan predicted that growth in the first quarter will be between 5.5 and 6%, citing the excellent performance of exports and industry. He stated that economic activity picked up in the first quarter of 2021, particularly in the industrial sector, and that output and commerce are currently better than they were before the epidemic.
According to a Reuters poll of 34 economists conducted between April 6 and 13, respondents anticipate Turkey’s economy to grow by 4.8 percent on average in 2021, boosted by 14.9 percent growth in the second quarter due to a so-called base effect following a pandemic-hit 2020.
Turkey was one of just a few nations to escape a recession as a result of the coronavirus outbreak last year. GDP increased by 5.9% in the fourth quarter and 1.8 percent in total in 2020. It shrank by 10% in the second quarter before rebounding in the second half of the year owing to a surge of state bank credit.
Elvan pointed out that military and auto exports will assist balance the country’s huge current account imbalance. According to official figures, the deficit, or the difference between what Turkey buys from abroad and what it exports to other countries, expanded to $2.61 billion in February. The rolling 12-month deficit was almost $37.8 billion. Last year’s current account deficit was $36.72 billion, owing mostly to a significant increase in the trade deficit and falling tourism earnings as a result of the epidemic.
In 2021, an increase in tourism earnings and exports is projected to close the deficit. In 2021, it’s also anticipated to be 3.2 percent of GDP, with 2.5 percent the following year. Elvan stated that the industrial and agricultural sectors are functioning well in terms of production and that Turkey is well-positioned for 2021 as a result of the steps implemented in the previous year.
A New Plan for an Important Economic Growth in Turkey
Also, as compared to 2019, nearly 5% of economic growth is expected in 2020 and this percentage of GDP growth is likely to be under control until 2022. If we talk about Turkey’s background in terms of economy, since 2000, tremendous growth in economic and social development has been noticed, thus, bringing a profitable outcome in the employment and incomes that makes Turkey one of the upper-middle-income countries in the world.
Despite the growing economic vulnerabilities and a challenging environment to implement ambitious goals in various areas, Turkey has come up with strong fiscal policy frameworks to overcome all complex challenges.
The latest data suggests that the economy will rebound in the third quarter of 2020. On an annual basis, the industrial output returned significantly in July–August after a severe drop in Q2, owing to soaring manufacturing production, which rose at the fastest rate in over two years in August. Furthermore, as the overall business climate improved and export prospects increased in the quarter, company confidence shifted to positive territory.
Despite the fact that consumer credit growth accelerated in the quarter, household spending is likely to have remained modest, since consumer confidence remained low and inflation remained high. Former Finance Minister Berat Albayrak announced the revised economic program for the years 2021–2023 in 2020. To promote growth, the program focuses on boosting innovation, value-added manufacturing, and exports, which are expected to rise at 5.8% next year.
Following the worst decline in almost a decade in 2020, the economy is expected to rebound significantly in 2021 as the pandemic’s influence fades and local and international demand increases. Nonetheless, the risks are skewed to the downside due to persistent currency weakness, high inflation, and a shaky external position. FocusEconomics Consensus Forecast panelists expect the economy to grow 4.3 percent in 2021, down 0.1 percentage points from last month’s forecast, and 4.1 percent in 2022, according to the FocusEconomics Consensus Forecast.
Foreign Investment is Always Welcome in Turkey
It has been also reported that the imports and exports of the goods and services to and from Turkey contain somewhat 60% of GDP. Foreign investment is always welcome in Turkey, i.e. investors and ex-pats from all countries can think of being a part of this country and the countries economy. All they need is to be aware of the restrictions in several sectors. Moreover, the financial system of Turkey is growing towards better transparency and effectiveness.
The Treasury and Finance Minister of Turkey, while presenting the details of the economic program of 2020, said that as a result of the country’s sensible economic growth forecast, it’s believed that what the government has projected for 2020 will emanate with an optimistic outcome in the corporate sectors in 2021 and afterward.
Economic Growth in Turkey Opens Great Opportunities for Investors
This financial growth of Turkey opens great opportunities for investors to invest in various sectors despite facing minimal lingering bureaucracy in the governing environment. The new plans are applauded for significant economic improvements that ensure reinstate the confidence between investors and locals.
Here is an article for further reading that might interest you; “Investing in Turkey: A Golden Opportunity for Foreign Investors.”
How is Turkey doing economically?
The new plans will be executed with efforts focused on both short-term and long-term solutions. We are here to provide a platform concentrating on the big picture of the country boosting strong investment breaks.
According to government officials, major corporations, and experts, Turkey’s economy will emerge from a lengthy downturn in 2021 and expand at a rate of up to 4% yearly, fueled by rising consumer demand as the coronavirus epidemic fades.
Due to a boom of cheap financing in the first half of the year, which disguised impact from the coronavirus, which has increased again in recent months, the $760 billion economy is forecast as narrowly avoiding a decline in 2020.
In the next months, virus-related curfews and restaurant closures, as well as high-interest rates intended to combat double-digit inflation, will constrain growth. However, the economy is expected to grow in 2021 and 2022, compared to a slow 2020, thanks to retail sales, manufacturing, and a surge in foreign investment in Turkish assets since November, when the government appointed a new central bank president and finance minister.
Burumceki Consulting’s Haluk Burumcekci said; the new leadership and promise of economic changes offered an opportunity to combat inflation after years well above the 5% objective. It is now approximately three times higher than that. Even with modest credit growth, the economy should grow at a rate of 4% this year, and we got off to a great start this year by taking measures to foster a market-friendly environment.
- Agencies, D. S. W. (2021, May 7). Strong exports to push Turkey over 5% economic growth in 2021. Daily Sabah. https://www.dailysabah.com/business/economy/strong-exports-to-push-turkey-over-5-economic-growth-in-2021
- FocusEconomics. (2020, November). Turkey. FocusEconomics | Economic Forecasts from the World’s Leading Economists. https://www.focus-economics.com/countries/turkey
- Coskun, O., Devranoglu, N., Caglayan, C., & Spicer, J. (2021, January 8). Turkey’s economy seen regaining some pace in 2021 after slump. REUTERS. https://www.reuters.com/article/turkey-economy-growth-int-idUSKBN29D1RK
This article was published on 02.12.2020 and last edited on 30.06.2021. Images used in this article have been taken from free image-sharing services on the internet. Also, in this article, which is called; “A New Plan for an Important Economic Growth in Turkey,” information freely shared on the internet was used, and necessary references were given in the article. We make every effort to offer accurate and current information. However, please do let us know if you find any errors in this article.