Report: A brief outlook of Turkish economy in June 2017

Fitch mentioned in its Global Economic Outlook report for June 2017 that it had raised growth expectations of Turkey for 2017 and 2018 from 2.3 and 1.3 percent to 4.7 and 4.1 percent respectively, taking into consideration the growth incentives provided by Turkey and the anticipation that there would be no election until 2019.

Thanks to the tight stance in monetary policy, Turkey continues to differentiate favorably from other developing countries in exchange rate and risk premium indicators. With the effect of macro prudential policies and credit guarantee support, there has been a significant increase in the growth of individual loans and commercial loans since the beginning of the year.

In the near term, it is expected that rapid credit growth will be replaced by a more moderate outlook after “supply-side influences in the banking system” take effect. It will be monitored to what extent the stimulus recorded via loans is reflected in general demand and economic activities

Although, the June consumer confidence index declined by 3.8 percent in May to 70 from 72.8 levels, experts receive signals of a strong support for further growth in second quarter as well. While the sub-indices for purchasing durable consumer goods have recorded a sharp decline, a significant improvement was observed in the inflation forecast of households.

In May, although total housing sales increased by 1.5 percent, the drop in momentum continued.

Increases of 10 percent and 7.6 percent in March and April respectively were observed. In the first five months of the year, sales of 557 thousand homes were realized, corresponding to an increase of 6.1 percent compared to the same period of the previous year. In May, mortgage sales increased by 17.8 percent, while first sales declined by 5.5 percent.

As of June 16, amount of stocks owned by residents abroad increased from $ 47,014 billion to $ 47,838 billion compared to the previous week, while private sector bonds and bills increased to $ 912 million, up from $ 881 million. In 2017, total foreign investment in stocks was US$ 2.446 billion.

On June 16, reserves of the Central Bank of Turkey, including gold, increased by $ 2.3 billion from the previous week to $ 109 billion.

Thus, since the beginning of the year, the Bank’s reserves increased by about $ 2.9 billion, with a $ 1.4 billion decrease in foreign exchange reserves and a $ 4.3 billion rise in gold reserves.

The Capacity Utilization Rate of Manufacturing Industry (CUR) increased by 1 point to 79 percent in June. Looking at the details in terms of groups, the annual increase in durable goods by 4.4 percentage points due to the latest incentives applied was noteworthy. It was strong with 2.2 points in investment goods and 1.7 points in intermediate goods. As for the sector basis, the effect of automotive sector supported by exports and the production of furniture and electrical equipments with tax reductions, continued

According to the Ministry of Customs (GTB), exports in May rose by 9.5 percent to $ 13.2 billion, while imports rose by 21.4 percent to $ 20.9 billion. Foreign trade deficit increased by 49.5 percent to 7.7 billion dollars, while imports coverage ratio decreased by 6.9 percentage points to 63.3 percent. 12 month cumulative exports increased by 3.64 percent to 148.0 billion dollars and imports increased by 4.48 percent to 207.3 billion dollars.

COMPILED FROM RELIABLE SOURCES.