Istanbul: Turkey’s economy probably grew 10 per cent in the third quarter, its fastest expansion in six years, a Reuters poll showed on Friday, boosted by government incentives and the base effect after last year’s coup attempt.
Overall, 2017 growth is seen at 6.1 per cent, according to the poll of 15 private sector economists, beating the September poll forecast of 4.5 per cent and the government’s official forecast of 5.5 per cent. The economy grew 3.2 per cent in 2016.
“Growth has gathered momentum in 2017 on the back of temporary tax measures stimulating consumption and employment, massive government credit guarantees and a strong recovery in export demand,” the Economic Co-operation and Development (OECD) said in a report on Turkey last month.
But given that some fiscal stimulus is scheduled to be wound down next year, Turkey needs to boost sentiment among businesses and households to maintain growth momentum, the OECD said.
After last year’s coup attempt caused the economy to contract 0.8 per cent in the third quarter, the government ramped up its stimulus measures, including the use of its Credit Guarantee Fund, and changes to tax regulation.
The fund guarantees loans to small- and medium-sized enterprises that could not otherwise get credit. It has backed some 221 billion lira ($57.39 billion, Dh210 billion) worth of loans so far, after its size was increased by more than ten-fold to 250 billion lira in March.
It is expected to add around 1.5 to 2 points to full-year growth, according to economy officials, who sees its largest contribution in the third quarter this year.
Following the July 15 coup attempt, the government embarked on a massive crackdown that sparked concern among investors.
Some 150,000 people have been sacked or suspended from jobs in the civil service and private sector and more than 50,000 have been detained. Turkey has remained under a state of emergency since shortly after the coup.
“If regional and domestic uncertainties were to be reduced ... a stronger acceleration in domestic and international business investment could lift growth onto a stronger path,” the OECD said. By the same token, it said greater uncertainty could slow expansion.
The data is due to be released on at 0700 GMT on Monday.