With strong recovery from the 3.2 percent growth in 2016, Turkey’s 2017 economic growth of 7.4 percent has shown the failure of international financial institutions to provide accurate estimates
With 7.4 percent growth in 2017, Turkey’s economy has surpassed all expectations by international institutions despite the fact that they updated their forecasts several times throughout the year.
The quarterly growth data in 2017, which were respectively recorded at 5.3 percent, 5.4 percent and 11.3 percent for the first, second and third quarters, compelled international finance corporations to upgrade their forecasts. Despite their upward revisions, international finance institutions failed to provide forecasts that truly reflected the growth potential of the Turkish economy.
According to the data released by the Turkish Statistical Institute (TurkStat) Thursday, Turkey’s economy expanded 7.3 percent in the last quarter and 7.4 percent in 2017.
From credit rating agencies to major global finance institutions that shape the economy worldwide, none were able to predict that the Turkish economy would grow 7.4 percent last year – a remarkable rebound from 2016 when the country saw 3.2 percent growth.
The International Monetary Fund (IMF), which said in its latest report that the economy would grow 7 percent in 2017, managed to provide the closest prediction.
In addition to country-specific reports, the IMF announces its expectations for the global economies in its World Economic Outlook (WEO) reports twice a year. The fund announced its first prediction of Turkey’s 2017 economic outlook in April 2015. In this report, IMF forecast that the Turkish economy would register a 3.59 percent growth in 2017.
In October 2015 report, the fund revised the prediction up to 3.69 while a downward revision to 3.43 came in April 2016. IMF downgraded its forecasts to 2.97 percent and 2.45 percent respectively in October 2016 and April 2017.
After the successful growth rate Turkey delivered in the first half of last year, IMF revised up its expectation of Turkey’s growth to 5.1 percent. In its latest Turkey report released in February, the IMF said that the Turkish economy would expand 7 percent with a 1.9 percent increase from its previous report.
In January 2015 Global Economic Prospects (GEP) report prepared by the World Bank, Turkey was estimated to grow 3.9 percent in 2017. In another report the GEP released in June 2015, the World Bank forecast that the economy would see a 3.7 percent growth.
Later in 2016 reports, the bank kept its estimates of the Turkey’s 2017 economic growth at 3.5 percent. In a January 2017 report, the forecasts came down to 3 percent and later revised further to 2.7 percent.
In a June 2017 GEP report, the World Bank said the Turkish economy would post a 3.5 percent expansion while an upgrade came in October 2017 when the bank estimated a 4 percent growth for the Turkish economy. In its last January 2018 report, the World Bank revis
ed up its estimates of the country’s economic performance to 6.7 percent.
The Organization for Economic Development and Cooperation (OECD) claimed in a 2015 November report that the Turkish economy will grow 4.1 percent in 2017 in Global Economic Outlook report. The estimates of OECD were later revised down to 3.7 and 3.3 percent in two reports released in 2016.
However, the organization said Turkey will record a 3.4 percent growth in a June 2017 report. Later in November 2017, OECD increases its estimates by 2.7 percent and forecast that the Turkish economy will grow 6.1 percent and to 6.9 percent in March.
The U.S.-based credit rating agencies, which keep Turkey’s credit rating at a non-investable level, also could not provide forecasts close to Turkey’s growth rate in 2017.
Moody’s said in April 2017 that the Turkish economy would expand 2.6 percent, which later was revised up to 3.7 percent. In February, the agency upgraded its estimate of the Turkish economy to 6.7 percent with a 3 percent raise from its previous statement.
Another U.S.-based credit rating agency Fitch Ratings said that it revised up its estimates of the Turkish economy after the release of the country’s quarterly growth data last year.
Fitch first predicted that the Turkish economy would grow 2.3 percent in 2017 and then raised its estimates to 4.7 percent and 5.5 percent. In its latest evaluation report released in January 2018, the agency said that the Tur
kish economy would expand 6.8 percent.
In a speech on Friday, President Recep Tayyip Erdoğan criticized international finance institutions for their evaluations that do not truly reflect the country’s growth potential.
Erdoğan’s remarks in the capital Ankara came one day after the TurkStat announced Turkey’s economy grew 7.4 percent in 2017 compared to the previous year.
The president reiterated that Turkey’s banner growth last year put it at the top of G20 countries.
“I hope such a result will be a lesson to everyone at a time when credit rating agencies’ biased evaluations and currency speculations have reached a peak,” Erdoğan said, referring to the predictions that fall short of the growth rate and the recent appreciation in the Turkish lira after the announcement of the growth data on Thursday.
The president also called on businessmen and markets to trust Turkey, saying it can overcome problems and realize economic targets with its opportunities and potential.