Turkey’s economy was expected to grow by 2.8 percent this year, little more than half of the government’s target, according to a Reuters poll on Thursday.
The prediction – which was the median estimate of 52 economists – also diverged significantly from a central bank survey this month of 88 bankers, industrialists and professionals, which saw Turkey’s economy expanding by 3.4 percent.
Turkey’s government has set an economic growth target of 5 percent for 2020 and is fuelling economic activity with cheap loans from state-run banks. The central bank is backing those efforts with rate cuts of its own – it has slashed its benchmark lending rate in half to 12 percent since July.
Turkey’s economy will continue to recover from a currency crisis in the summer of 2018, but with little momentum, Germany’s DZ Bank said in a recent report, according to Reuters. The bank cited political risk as one of the reasons for the underperformance.
The Turkish economy is likely to have expanded by 0.2 percent last year, according to the Reuters survey. Economic growth next year was seen at 3 percent.
Turkey’s central bank was due to decide on interest rates later on Thursday, with economists divided over whether it would reduce borrowing costs for banks further.
Reuters said its consensus forecast was for the central bank to reduce the policy rate to 11.5 percent by the end of the first quarter, and to 10.25 percent by the year-end. That prediction contradicted a forecast by President Recep Tayyip Erdoğan that rates would fall to single digits in 2020.
Consumer price inflation was expected to slow to 9.5 percent this year and to 9 percent in 2021, Reuters said. CPI stood at 11.8 percent in December.