Based on its “Turkey Regular Economic Brief” report, the World Bank on Wednesday confirmed its growth outlook for the Turkish economy.
The Bank said public spending offset weaker private demand to keep growth solid in the first quarter, thus left the 3 percent growth forecast unchanged.
The report also pointed out the strong job creation driven by services and industry in the first quarter.
However, the World Bank downgraded the growth forecast for 2016 and 2017 to 3.5 percent for both years, from 3.9 percent and 3.7 percent respectively. According to the bank, uncertain domestic political outlook and gradually tightening global financial environment play a role in this decision.
The World Bank said if further pressures on the exchange rate can be contained, 12-month inflation is likely to decline to 7 percent by December this year. The Bank foresaw the current account deficit, which has been narrowing since January, falling to 4.6 percent of gross domestic product (GDP).
As the US Federal Reserve is expected to hike its interest rates this year, the eventual tighter monetary policies will pressure all emerging market currencies, said the World Bank, adding the Turkish Central Bank will have limited room to be accommodative whilst maintaining financial stability.