Boston, MA -- (SBWIRE) -- 01/03/2014 -- Although we view positively Turkey's long-term growth potential, our real GDP growth forecasts remain well below consensus in 2014 and 2015. Rising domestic interest rates, in line with developed state yields, will stifle credit growth, an important driver of the Turkish economy.

With relatively healthy budget and debt dynamics, the government is in a position to provide a more pronounced fiscal boost to the economy. However, we expect fiscal discipline to remain relatively high on the government's agenda, with monetary policy playing a more active role in supporting growth.

View Full Report Details and Table of Contents

While the government's debt load is low by regional standards, the private sector's rampant external borrowing in previous years has greatly increased macroeconomic risks.

After substantial widening of external imbalances in 2013, we expect Turkey's current account deficit to narrow only gradually in coming years due to its dependence on imported energy. Turkey will remain reliant on short-term foreign capital inflows to cover the sizeable current account shortfall, leaving it prone to shifts in international risk sentiment and leaving open the potential for financing crises.

Recent protests have highlighted the fact that major political challenges still face the country over the medium term. In particular, the government will struggle to secure a multi-party consensus on the process of writing a new constitution, and the ruling Justice and Development Party will face growing and more vocal public opposition, with the potential for further unrest. Moreover, Turkey faces a challenging foreign policy environment amidst heightened regional tensions as the government attempts to cement its role as an economic and political power in the region.

Major Forecast Changes

We have revised down our 2014 real GDP forecasts for Turkey on the back of tightening monetary conditions and our expectation for a less amenable global environment for emerging market growth. We now expect growth of 2.6% in 2014 from 3.1% previously. Nevertheless, if the Turkish authorities are able to weather the rebalancing process and challenging external financing environment over the next few quarters, the country's long-term growth story remains an attractive one.

About Fast Market Research
Fast Market Research is an online aggregator and distributor of market research and business information. Representing the world's top research publishers and analysts, we provide quick and easy access to the best competitive intelligence available. Our unbiased, expert staff will help you find the right research to fit your requirements and your budget. For more information about these or related research reports, please visit our website at http://www.fastmr.com or call us at 1.800.844.8156.

Browse all Country Reports research reports at Fast Market Research

You may also be interested in these related reports:

- Chile Business Forecast Report Q1 2014
- Spain Business Forecast Report Q1 2014
- Hungary Business Forecast Report Q1 2014
- Russia Business Forecast Report Q1 2014
- Mexico Business Forecast Report Q1 2014
- Brazil Business Forecast Report Q1 2014
- Lithuania Business Forecast Report Q1 2014
- Australia Business Forecast Report Q1 2014
- Vietnam Business Forecast Report Q1 2014
- Kuwait Business Forecast Report Q1 2014