Turkey - Rebalancing and Transforming the Economy

Turkey’s economic and social performance since 2000 has been impressive. However, more recently the country has faced a number of internal and external challenges, notably macroeconomic imbalances, geopolitical uncertainties, changing patterns of global capital and trade flows, and the effects of climate change.

 

 

These challenges have tested investor confidence and by the summer of 2018 there has been a significant depreciation of the Turkish lira.

 

 

After the formation of the new Government, the authorities responded with appropriate coordinated policy action. Monetary policy was tightened substantially and the New Economic Programme was introduced. This resulted in macroeconomic stabilisation, but at the cost of a sharp slowdown in economic activity.

 

 

Meanwhile, the private sector in Turkey is deleveraging. Credit growth, which had been an important catalyst for economic growth in the past, is unlikely to pick up quickly. In the EBRD’s view, the outlook for the medium term is for growth to be below trend.

 

 

After local elections in March 2018, the authorities have a four-year window with no scheduled polls on the horizon. They are now considering a range of structural reforms to ensure a more sustainable medium and long-term growth path for the economy. This year’s Investment Outlook Session explored this question from the perspective of a top-level Turkish policymaker.

 

 

Moderator

 

 

Arvid Tuerkner

 

Managing Director, Turkey, EBRD - Istanbul

 

 

Speakers

 

 

Berat Albayrak

 

Minister, Ministry of Treasury and Finance

 

 

Done