The Turkish economy, one of the world's best performers last year, will not see such heady gains in 2012 as the central bank's complicated policy mix aimed at taming inflation hampers growth, a Reuters poll showed on Thursday.
A poll of more than 30 economists, taken in the past week, showed the Turkish economy will grow 3.0 percent in 2012 - a sharp slowdown from 8.5 percent growth last year, but higher than the 2.4 percent expansion predicted in a January poll.
After a very disappointing start to the year, growth is likely to pick up over the coming few quarters. "Thanks to the measures applied by the central bank and other economic authorities, we expect the economy to have a soft landing in 2012. We don't agree with disaster scenarios," said Sebnem Mermertas, a manager at the research department of TSKB. Growth forecasts in the poll ranged between 1.7 percent and 4.4 percent for this year, and between 2.5 percent and 5.6 percent for 2013.
The poll's 2012 growth prediction comes in-between the International Monetary Fund's forecast of 2.3 percent and an expansion of 4 percent targeted by the government.
Since late 2010, the central bank has mixed high reserve requirement ratios with an adjustable interest rate corridor and a low policy interest rate as it seeks to dampen local demand and tackle soaring inflation while avoiding a growth collapse.
Its battle with inflation has led the central bank to adopt a more hawkish bias recently and to significantly tighten lira liquidity by holding expensive intraday repo auctions, although it left its main policy mix unchanged on Wednesday. None of the analysts polled said they expect the central bank to change its key policy rate - the one-week repo rate - until at least October. Medians suggest the bank will maintain the current 5.75 percent rate until at least next July. "The bank seems to prefer adjusting the interest rate corridor instead of changing the policy rate," Mermertas said.
Cooling demand would also help the current account deficit, the main vulnerability of the Turkish economy. The poll sees it narrowing to $70.0 billion by the end of 2012, higher than the $59.6 billion estimated in January's survey.
Turkey's external deficit, which largely reflects the economy's dependence on energy imports, fell some 30 percent on the year to $4.22 billion in February. That brought the 12-month rolling deficit to $75.3 billion from its peak of $78.6 billion last October.
"I expect the deficit to shrink this year as pressure from domestic demand on the trade balance has faded already as a result of the central bank's tightening measures implemented in 2011," said 4Cast Limited analyst Piotr Matys.
"The biggest risk to further improvement stems from high oil prices, given that Turkey imports more than 90 percent of its energy needs. In the first quarter the strong lira provided a layer of insulation from rising oil prices," Matys added. After losing roughly 20 percent versus the dollar in 2011, the lira has gained around 6 percent this year to trade around 1.79, stronger than 1.86 estimated in a separate Reuters poll conducted earlier in January.
Despite moderating economic activity, inflation will fall only gradually, ending 2012 at 7.5 percent according to median forecasts, higher than the central bank's target of 5 percent.
Consumer inflation is expected to only barely ease to 10.3 percent by the end of the second quarter, after peaking near three-year highs of 10.43 percent in March.
Comments
Comments are closed.