Turkish economy

Fitch Ratings International projects progress in the Turkish economy

The world-renowned Fitch Ratings Agency has projected that the Turkish economy will witness moderate levels of progress in 2017 and 2018.

The agency added in its Global Economic Projections report that the Turkish economy is expected to achieve a 2.4% growth in the Gross Domestic Product – GDP - by year-end and will climb slightly to 2.8% by next year.

Despite the recent turbulence in Turkish economy attributed to the failed coup attempt and the plummet of the Turkish Lira value, the local economy has proven to be resilient in the face of the storm due to its diverse economy and revenue streams.

The agency also stipulated that inflation in Turkey will probably reach 8% by the end of this year, however, it expects that the inflation rate will drop to 7.5% in conjunction with the downward slide of the Turkish Lira value.

The report also stipulated that interest rates in Turkey will hover around 9% in 2017 and the exchange rate of the US Dollar to the Turkish Lira will remain at around 3.8 Liras to 1 USD for this year and next year.

In comparison, Fitch Ratings projects that the world economic growth will grow by 2.7% in 2017 to reach 3% by the end of 2018.

Turkey is witnessing major security and economic challenges which commenced at the start of Arab Spring and was evident in what was known as the Taksim Square events on 28 May 2013. Additionally, the attack on Istanbul Airport on 28 June 2016 where 43 people lost their lives and 239 were injured, has dealt a blow to the tourism sector causing hotel cancellations and hesitation in property investments. Topping these incidents was the failed coup attempt on 15 July 2015.

However, the Turkish economy started to show signs of improvements in the investment sector since then until the 2 explosions which took place in the vibrant suburb of Beşiktaş in Istanbul on December 10 where 38 people were killed (20 were police officers) and 155 were injured.

These events among others had a negative impact on the Turkish economy and the value of the Turkish Lira which suffered a major slide against the US Dollar providing the political enemies of President Erdoğan and his party with ample fuel to attack his economic reform policies.