By Ali Kucukgocmen and Ezgi Erkoyun
ISTANBUL, May 26 (Reuters) – Turkey’s economy is expected to have expanded 7.1% in the first quarter of 2022 largely thanks to strong exports, a Reuters poll showed on Thursday, but growth was seen dropping to 3% for the full-year.
Turkey’s economy bounced back from the COVID-19 pandemic to grow 11% in 2021, its highest in a decade, after narrowly expanding in 2020.
It is expected to have continued the strong performance in the first quarter of 2022, despite inflation soaring to 70% in April and a widening current account deficit due to the surge in global commodity prices.
The median estimate of 18 economists in the Reuters poll GDP growth TRGDPQ=ECI in the first quarter was 7.1%, with forecasts ranging between 1.8% and 8.0%.
President Tayyip Erdogan is implementing an economic plan that prioritises growth, employment, investment and exports driven by a series of unorthodox interest rate cuts which have brought the central bank’s policy rate down to 14%.
Paradoxically, economists say the rate cuts could hamper growth in 2022 after they triggered a currency crisis and sent inflation soaring.
The median estimate of 28 economists for GDP growth in 2022 stood at 3.0%, in a range of 0.3% and 5.0%.
BBVA said while the deceleration in economic activity continues, growth-supportive policies help prevent a relatively faster slowdown.
“Larger negative real interest rates, recent push in credits and loose fiscal policy remain supportive in the short term. Also, the recent performance in both exports and tourism show resilience which surprise on the upside,” it said in a note.
But financial volatility and uncertainty in global markets and their potential impact on external demand create downside risks to growth in the near term, BBVA added.
The Turkish Statistical Institute will release Q1 growth data at 0700 GMT on May 31.
(Additional reporting by Indradip Ghosh in Bangalore Editing by Daren Butler)
((ali.kucukgocmen@thomsonreuters.com , @alikucukgocmen; +905319306206; Reuters Messaging: Reuters Messaging: ali.kucukgocmen.thomsonreuters.com@reuters.net))
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