The news that Turkey's growth rate has been revised upwards has been welcome news. But it's no surprise to Cameron Deggin.
"OK, so I said 3%," the Property Turkey director admits. "But look, I'm happy to be proved wrong."
In fact, the Turkish economy has defied expectations - and Deggin's prediction - with a new forecast by ratings agency Fitch pointing to 3.9% growth this year.
“In 2020 we expect a recovery, with GDP growth going from 0.4 percent last year to 3.9 percent this year,” Douglas Winslow, director in Fitch Ratings’ sovereign team, told Andalou News Agency.
Winslow said the revision was driven by private consumption, a lower interest rate, and a sharp increase in private lending. He also signposted an increase in investment.
A swift recovery
"It shows how speedily Turkey has recovered from the 2018 currency devaluation," Deggin points out. "Turkey's fundamentals are strong, which has underpinned its economic growth."
In 2018, prompted in part by a significant current account deficit and large amounts of foreign-currency debt, the Turkish lira plunged in value, causing the Turkish economy to contract.
Towards the end of 2018, against President Recep Tayyip Erdogan's wishes, Turkey's central bank raised interest rates to curb the currency slide. It worked: the lira stabilised, and the economy grew by 0.6% last year.
Interest rates have now come down from a lofty height of 24%. While the interest rate is currently sitting at 10.5%, commentators believe that figure will drop to 9% around the middle of the year.
When that happens, Deggin says, the economy will further be bolstered by an influx of domestic property buyers.
"That will make it very interesting for foreign investors," Deggin predicts. "Who will suddenly be competing with Turkish buyers for properties."
However, foreign investor interest in Turkey remained strong, he says.
"Whatever is going on with the domestic market, economic growth is always a positive for foreign investors, especially those coming from countries with lower growth."
Deggin said the property market continued to attract buyers from the Middle East, Northern and Western Europe, and increasingly, China.
Poised for future growth
Fitch's rating for Turkey's economy in 2021 is currently 4%.
Winslow says long-term confidence in Turkey is strong, and the government is working hard to reform the economy to address chinks in its armour.
“We have greater confidence that the growth is recovering in the near-term. And we have upgraded the GDP forecast not just to 3.9 percent this year but also 4.00 percent next year.
“We also maintained our assessment that the longer-term potential trend growth of the Turkish economy is around 4.3 percent. The composition and sustainability of GDP growth is particularly important for the rating. Some of the government’s planned reform measures are aimed at reducing the risk of greater imbalances building up."
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