Analysts from Mizuho Bank, expect a slowdown in economic growth during 2019 on the back of the TRY depreciation.
Key Quotes:
“Turkey’s economic growth rate is expected to decline sharply in 2019 reflecting the Turkish lira’s plunge in summer 2018″.
“The rise of inflation will squeeze real incomes, causing personal consumption to stall.”
“Given the decision to freeze new infrastructure investment in the medium-term plan, in addition to the impact of the rise of interest rates, an investment slump appears inevitable.”
“Fundamentals are weak and there are lingering capital outflow risks. The key is whether Turkey can continue to tighten fiscal and monetary policy.
“While the Turkish lira has returned to the exchange rate as of autumn 2018, it will be necessary to keep a close eye upon capital outflow risks under a large current account deficit and shortage of foreign currency reserves.”
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