The Economic Outlook in 2009
In 2010, inflationary pressures will remain weak under the assumption that economic recovery will be slow and gradual.
Recent data releases indicate that economic contraction in Turkey slows down.
Data announced in the second half of 2009 indicate that the economic contraction in Turkey is coming to an end. Nonetheless, the weakness in real sector and consumer confidence indices coupled with expectations for slow global recovery from the economic crisis suggest that the Turkish economy will recover gradually in the coming period.
In 2010, economic developments in Turkey’s main export markets, primarily the European Union, will affect the growth rate of the Turkish economy. The Turkish economy is forecasted to grow by 3.5% in 2010.
In 2010, inflationary pressures will remain weak under the assumption that economic recovery will be slow and gradual. Thanks to the reduced inflationary pressures, interest rates will remain at the current historically low levels in the first half of 2010, while CBRT policy rates are likely to increase gradually in the second half of 2010, depending on the pace of economic recovery.
Improvements in Turkey’s credit rating will increase capital inflows.
The Institute of International Finance expects a significant increase in capital inflows to developing countries in 2010. Turkey is predicted to have a larger share of international capital inflows thanks to improvements in its credit rating. The Turkish Lira is not expected to be under significant pressure in the coming period, considering that the current account deficit is at much lower levels compared to previous years.
Credit volume of the banking sector is expected to rise in 2010.
The credit volume of the banking sector is expected to continue rising in the next period, considering the relative improvements in global risk perception as well as forecasts that CBRT will keep interest rates at low levels for a while. However, the real sector’s weak propensity to invest and the negative trend in employment suggest that this increase will be gradual.