Raising its estimates, the IMF: Turkey's economy will grow to 6% in 2021 ... and these reasons

The experts of the International Monetary Fund said yesterday, Monday, that Turkey's economy will grow by about 6% in 2021, before retreating to 3.5% in 2022, but they urged Ankara to implement additional targeted stimulus to face the repercussions of the Corona (Covid-19) argument.

The latest forecasts for GDP growth came in a statement issued by IMF experts regarding preliminary results of the fund's annual review of Turkey's economy.

These estimates are higher than previous estimates of 5% growth issued last October, as part of the Fund's update of its previous forecasts for the outlook for the global economy.

The IMF intends to update its new forecasts for the outlook for the global economy today, which had previously estimated that the Turkish economy will shrink 5% in 2020.

The IMF attributed its optimistic forecasts to the Turkish economy, including the launch of a vaccine and the continuation of the positive momentum at the end of 2020.

And experts from Fitch Ratings said that the start of vaccination against Corona, and the reduction of restrictions and measures to combat the pandemic, will lead to an acceleration of the Turkish economy in the second half of this year.

Financial support

The IMF said that Turkey needs more "targeted and temporary" financial support despite the direct financial support measures it has implemented by only 2.5% of GDP.

"Turkey has some fiscal space to expand support in 2021, perhaps in the range of 1% of GDP. Social transfers for vulnerable families and informal workers would support the people hardest hit by the pandemic," IMF experts added.

As for inflation, IMF experts expected it to decline slightly in Turkey by the end of 2021, but it will remain above the target level.

It is expected that Turkey's current account deficit will decline to 3.5% of GDP, while largely reflecting the decline in gold imports and the limited recovery of tourism.

Yesterday, Energy Minister Fatih Donmez said that his country aims to increase its domestic production capacity of gold to 100 tons per year, or more, in the next five years.

However, the IMF experts report warned that the decline in foreign exchange reserves, in addition to the rise in external financing needs and the increase in domestic deposits in foreign currencies, are all factors that make Turkey "vulnerable to shocks and a change in sentiment."