The EBRD has revised up its forecasts for economic growth in Turkey for 2014, following a stronger-than-expected performance so far this year that was driven mainly by rising exports and also supported by a reduction in central bank interest rates.
The Bank is predicting growth of 3.0 per cent in 2014, compared with a forecast of 2.5 per cent in May. It left its forecast for 2015 unchanged at 3.2 per cent.
The EBRD’s latest economic report warned that Turkey’s export-driven growth may be muted later in the year because of increased tensions in Iraq, which is Turkey’s second largest export partner, and also because of still shaky growth in the EU.
It also said the central bank’s easing cycle would continue with caution, if at all, as inflation remained high, at 9.5 per cent in July, well above a target of 5 per cent.
A vulnerability to external factors and a large exposure to global liquidity conditions remained the largest risks that Turkey faced.
However, the report said the country had shown resilience in the face of similar turbulence in the past.