Turkey » Outlook

International Property Brokers forecast that GDP growth in 2008 is forecast to remain steady at about 4%. In 2009 stronger domestic demand and export growth is expected to push up growth to around 5-5.5%.

Because of high interest payments and a smaller primary surplus, the budget deficit will rise to 2.5-3% of GDP in 2008-09, before falling to around 1.5-2% in 2010-12.

High inflation and interest rate rises have slowed economic growth. We expect it to be just under 4% in 2007-08 and about 5-5.5% in 2009-12. We expect that the current-account deficit will remain large throughout the forecast period at around 7-7.5% of GDP in 2007-09 and about 6.5% in 2010-12.

High interest payments and smaller primary surpluses are expected to keep the budget deficit at 2.5-3% of GDP in 2008-09, up from 0.8% in 2006 and an estimated 2.2% in 2007. The public debt/GDP ratio should continue to fall.

We have been predicting a pointed fall in the lira for some time. In mid-May it fell from YTL1.33: US$1 to YTL1.46: US$1 in a small number of days. We expect more instability later this year and an additional drop to about YTL1.68: US$1 by end of 2006.