Turkish economy to grow 5 pct despite ‘uncertainties’

Turkey is expected to see a rebound in real economy activity in 2021, but in an environment of macroeconomic uncertainty and elevated vulnerabilities, said a World Bank report released on April 27.

"Turkey and much of the rest of the world will struggle to shake off the COVID-19 pandemic this year. Annual growth in Turkey is nevertheless expected to be a respectable 5 percent since the 'base' for comparison in early 2020 was exceptionally low," said the Turkey Economic Monitor report.

Turkish exports are expected to account for two-thirds of growth in 2021, normalizing from the severe shock of last year, while private consumption is expected to only contribute slightly to growth, according to the World Bank economists.

"The shock to the labor market is likely to have long-lasting effects, and social assistance, as well as active and targeted labor market policies, will be increasingly important to ensure people, especially women and youth, can fulfil their potential," noted David Knight, an expert at the World Bank Turkey Office and team leader for the report.

"While the recovery in late 2020 has helped labor markets recover somewhat, many have been left behind, especially women, youth and lower-skilled workers. This, in conjunction with high inflation is likely to have hurt the poor more. Poverty is estimated to have risen to 12.2 percent in 2020 from 10.2 percent in 2019," the report said.
Last year, Turkey responded to COVID-19 with a large economic stimulus program, focused on credit channels. In fiscal terms, Turkey's COVID-19 stimulus package amounted to nearly 12 percent of its gross domestic product (GDP), including tax deferrals and contingent liabilities.

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