Economic outlook of Turkey as economy grows 1.8 pct
Selva Demiralp writes: Turkey registered a 1.8 percent growth rate for 2020 and became one of the few countries that achieved positive growth during the pandemic. Yet, the consequent pressures on the TL and the sale of Central Bank reserves to offset such pressures generated further vulnerabilities that are inherited in 2021.
Prominent economist Selva Demiralp has penned a piece on Turkey's 2020 growth rate, which was officially announced as 1.8 percent on March 1.
"The growth performance was primarily a consequence of the excessive credit growth and low interest rate policies adopted during 2020. Yet, the consequent pressures on the TL and the sale of central bank reserves to offset such pressures generated further vulnerabilities that are inherited in 2021," Demiralp said in her piece on Yetkin Report.
"We are not out of the woods yet. Turkey is still walking a tightrope between a tight monetary stance to stabilize the inflationary pressures, and entertaining the idea of a more accommodative policy stance to support the economy," she said, before asking three questions on the country's monetary policies.
Demiralp sought to find answers to the questions of "Why did Turkey raise interest rates in the middle of the pandemic?", "Why did the market rates actually decline following the rate hike?" and "Why are we still not out of the woods yet?" in her analysis.
You can read Demiralp's piece in full here.