Turkey: The following represents a general Table of Contents outline for the Country Economic Forecast. The actual report may cover any or all of the topics listed below. Highlights and Key Issues - four/five paragraphs of analysis covering the main economic and political issues contained in the subsequent Economic Overview Forecast Table showing % changes for the country - with 2 years of historical data and 4 years of forecast data for the following: Domestic demand Private consumption Fixed investment Stockbuilding (% of GDP) Government consumption Exports of goods and services Imports of goods and services Unemployment Consumer prices Current account balance (US$ and % of GDP) Government budget (% of GDP) Short-term interest rates (%) Long-term interest rates (%) Exchange rate (vs. US dollar) Exchange rate (vs. euro) Economic Overview - two pages of events-driven analysis highlighting the most recent economic activity and, where relevant, political developments of the country, detailing significant changes to Oxford Economics' forecasts Charts and Tables - covering a full range of economic developments relevant to the time period covered. These could include such topics as: Contributions to GDP growth Monthly industrial output Business and consumer confidence Unemployment rate Retail sales Prices and earnings Consumption and investment Government balance and debt GDP and industrial production Monetary policy and bond yields Background Information on the country One or two pages of text covering the main historical political and economic factors that determine the country's current position Key Facts on the country Map of the country Key political facts Long-term economic and social development - changes since 1980 Structure of GDP by output - latest year Long-term sovereign credit ratings and outlook Corruption perceptions index- latest year Structural economic indicators - changes since 1990 Destination of goods' exports -prior years - latest year Composition of goods & services exports - latest year
Over the last few weeks, Turkish financial markets have been hit by three unfavourable developments – first, the repercussions for emergers from speculation that QE in the US might soon be reduced; second, a record monthly trade deficit in April and third, the upsurge in political disturbances in Istanbul. As a result, the TRY has slipped to its lowest level against the euro since the end of 2011 and short-term market interest rates have risen back to the levels seen prior to the central bank’s easing of policy in April and May. This enforced tightening by the markets may be no bad thing as the latest data suggest that the domestic economy was already growing strongly and that further stimulus was not required. In Q1, seasonally adjusted GDP increased by 1.6% on the quarter, while our estimate for consumer spending on the same basis rose by 2.3% – its largest gain in two years. Moreover, import volumes surged in April and bank lending shot up in May – both indicative of strengthening demand. Our new forecasts for GDP growth in 2013 and 2014 – at 3.7% and 5.2% respectively – are little changed from previous estimates, partly as we were assuming that the bank would have to tighten in 2013H2 as the recovery became more obvious. But there is a higher degree of uncertainty about the prospects – including those for the long term. The government will need to avoid further divisions within society that could undermine both domestic and foreign investor confidence in the country’s future.