EBRD raises Turkey’s GDP growth forecast, vulnerabilities remain

The European Bank for Reconstruction and Development (EBRD) has upgraded Turkey’s GDP growth forecast for 2022 due to stronger-than-expected domestic demand and a modest recovery in exports, in its latest regional economic outlook report.

As a result, GDP growth in Turkey is expected to reach 4.5% in 2022, up from 2.5% in the previous report in May this year, supported by government spending ahead of the expected elections and better-than-expected net exports, partly reflecting an increase in exports. in Russia. The country’s GDP growth forecast for 2023 is unchanged at 3.5%.

The report underlines that economic activity has remained relatively robust, while the rapid decline in the value of the Turkish lira and runaway inflation remain the main vulnerabilities.

Turkey’s growing current account deficit and short-term external debt of $180 billion also remain significant concerns in terms of reserves, which currently stand at around $15 billion.

The Bank said global downside risks such as geopolitical tensions and aggressive monetary tightening in developed countries could also affect Turkey’s GDP growth.

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