Turkey: After strong growth in 2017, economy likely to lose steam in 2018 – Standard Chartered

The Turkish economy ended 2017 on a strong footing as Q4 GDP growth was 7.3% y/y, above consensus of 6.7%, making Turkey one of the fastest-growing emerging markets last year, points out the research team at Standard Chartered.

Key Quotes

“Full-year growth rose to 7.4%, from 3.1% in 2016. We identify three key drivers behind this improvement:

• Countercyclical fiscal policy: the TRY 250bn Credit Guarantee Fund (CGF) that guarantees loans to the private sector fuelled credit growth of c.20%. Fiscal incentives through tax breaks on durable goods and property and higher spending helped boost domestic consumption.
• A recovery in tourism: the number of visitors to Turkey rose c.27% to 32mn in 2017, close to the 2014 high of 36mn.
• Strong global growth: the broad-based recovery in global growth, with a pick-up in the EU – Turkey’s main trading partner – supported healthy export growth.”

“Notwithstanding this strong performance, we see softer economic activity in 2018 as the business cycle returns to more sustainable growth levels.”