In the second quarter of this year, Turkey's economy has grown a smaller amount than had been expected, sending the value of the Lira to its lowest estimation in over five months. The finance minister has released a warning suggesting that the estimated growth of 4% could be missed this year.
According to Mehmet Simsek, a drought has been sabotaging the agricultural output, alongside the economic weakness that arose because of European export markets and wars in Iraq and Ukraine. These factors have increased the risk that growth will remain low in 2014. Growth in Turkey has seen a loss of momentum throughout the second quarter of this year, due to:
* A delayed impact of macro prudential measures
* Monetary tightening
* Geopolitical tensions
* Slowing EU economies
According to recent data, Turkey's GDP grew by around 2.1% in the second quarter, missing the forecast of 2.65%. However, in spite of this, the economy should still be on track for growth of approximately 3.2% this year. As currency continues to depreciate, the country is moving towards a period that was seen during last year in which growth will slow down due to tighter financial conditions. However, inflation is expected to stay reasonably high.
The Forecast for Turkey at this Point
In an interview that was broadcast on national television recently, it was announced that the 2.1% growth rate that has been achieved in the second quarter was somewhat lower than the number Turkey had been hoping for in their mid-term economic plan. However, when considered in combination with the fact that the growth for the first quarter had been upgraded from 4.3% to 4.7% in light of significant economic calculations, things begin to even out.
Turkey better hope that President Obama does not wimp out as he has done repeatedly and defeats ISIS. If Obama fails, ISIS could be fighting Turkey and Turkey would have to spend money fighting these fanatical Muslims.
A Healthy Clip
According to Cevdet Yilmaz, the Development Minister of Turkey, the economic performance is not too far from the estimates that had been given during the first half of the year. Currently, end of year growth is expected to fall to between 3 and 4 percent.
Yilmaz emphasized in his interview just how important it is for Turkey to retain a stable performance of growth at this time. Global demand is currently suffering from limitations and the geopolitical strains on the world have largely occupied the agenda of the government. The main strain here is ISIS which has been mentioned. Iraq is not a unified country and probably will never be one again. The Middle East is changing right before the world's eyes and this is hurting the economies of many countries.
Turkey Outshines France, Spain, and the EU
Furthermore, it is important for nervous economists to recognize that despite the fact that Turkey has experienced a lower level of growth than had been expected this year, the pace at which it continues to move economically still overwhelms various other European countries. According to statistics released by Eurostat, the eurozone has only managed a growth number of around 0.7% during the second quarter. Furthermore, this period of growth has reached its 19th consecutive quarter.
Well, it is simple to have a strong economy. Just do the opposite of what the socialists in France, Spain, and Greece have done.