'Signs point to Turkish economy on road to recovery'

LONDON – Leading indicators suggest the Turkish economy has started to recover and the economy is set to bounce back 5% in 2021, according to Roger Kelly, lead regional economist of the European Bank for Reconstruction and Development (EBRD).

Noting that like all the economies, Turkey’s economy has been hit by the pandemic, Kelly told Anadolu Agency on Thursday: “We expect the economy to contract by 3.5% this year and growth of 5% next year. Of course, given the circumstances these forecasts are subject to greater than usual uncertainty.”

He added: “Certainly leading indicators suggest that the economy has started to recover and our forecast assumes that the pickup that we have seen so far in the second half of 2020 continues. Turkey is a consumption-driven economy and tends to recover quickly, which is why we have a solid growth forecast for 2021.”

Noting the importance of macroeconomic stability, he said: “The fact that the Central Bank recently increased rates for the first time in two years is hopefully a sign of a renewed focus on macroeconomic stability.”

He said that the main risk at present is that the global economy is hit by a serious second wave of the pandemic, with associated social distancing measures.

“This would be a huge setback to the gradual normalization of activity we assume in Turkey, hitting both domestic and external demand,” he explained.

But he added that the “crisis presents opportunities to the Turkish economy in the form of trade deflection as firms seek to shorten their supply chains.”

“Turkey's geographical location and flexible manufacturing base should enable it to benefit from near-shoring, particularly with the EU,” he said.