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According to the Research Department at BBVA, despite the downside surprise of 1Q GDP in Turkey, they still maintain a 2020 GDP forecast of 0%, with risks still somehow balanced, depending on the recovery pattern in the rest of the year.

Key Quotes: 

“Turkish Economy grew by 4.5% yoy in 1Q20, lower than expectations (5.5% BBVA Research vs. 4.9% Bloomberg). Seasonally and calendar adjusted quarterly growth also decelerated to 0.6% from the previous 1.9% in 4Q19. The downside surprise stems from the more rapid reaction of services to the impact of the Covid shock, especially on the more sensitive ones: trade, transportation, accommodation and financial services.”

“Our monthly GDP indicator nowcasts a yearly growth rate of -0.4% for April and -6.3% for May, which would be recovering in June thanks to both positive calendar day effects and the lifting of the restrictions and could even be better than our initial projections.”

“We still maintain our GDP growth forecast at 0% for 2020, assuming a partial gradual recovery pattern in the rest of the year.”

“As the lockdown measures begin to ease globally, we expect a gradual recovery from now onwards, whose pattern will depend on the behavioral changes and global risk mood together with the domestic macroeconomic policies.”