Country Report Turkey October 2015

Country Report Turkey October 2015

Outlook for 2015-19

  • The Economist Intelligence Unit's baseline forecast is that the outcome of the snap election on November 1st will not differ much from the vote on June 7th.
  • We expect that an unstable, short-lived coalition administration will eventually be formed, led by the Justice and Development Party (AKP), which lost its parliamentary majority in June after 12 years of single-party government.
  • Unable to carry out his plan to establish a presidential system of government, we expect the president and de facto AKP leader, Recep Tayyip Erdogan, to return to the prime minister's office in the medium term.
  • An eruption of violence in the south-east of Turkey, which has halted the Kurdish peace process, and the spillover into Turkey of the conflict in Syria, will stoke social and political tensions.
  • We expect the Central Bank of Turkey to raise interest rates moderately when the US Federal Reserve starts to tighten policy in the coming months. We expect modest Turkish interest rate cuts from late 2016, if inflation is on a downward path.
  • The budget deficit is forecast to widen to 2.2% in 2016, but to ease slightly in 2017-19. An uncertain post-election outlook raises the risk of deterioration.
  • We forecast real GDP growth of 3% in 2015 and 2.8% in 2016. We expect a moderate acceleration to about 3.5% a year in 2017-19, depending on domestic and external conditions gradually stabilising.
  • We expect the current-account deficit to narrow slightly, to 5.5% of GDP in 2015 and 5.2% in 2016, as a result of solid export growth, lower global oil prices and sluggish domestic demand. We expect it to widen moderately from 2017.


  • On October 10th two suspected suicide bombings killed at least 99 people and injured hundreds of others as civil society groups prepared to participate in a peace rally in the capital, Ankara. The bombings are believed to have been carried out by Islamic State (IS), the extreme jihadi group.
  • Security concerns have led two opposition parties, the People's Democratic Party (HDP) and the Republican People's Party (CHP), to cancel election campaign rallies.
  • NATO has warned that it is willing to send forces to protect Turkey following violations of Turkish airspace by Russian aircraft conducting operations in Syria.
  • According to Turkstat, calendar-adjusted real GDP rose by 3.8% year on year in the second quarter of 2015, up from 2.6% in the first.
  • The consumer price index rose by 0.9% month on month in September (seasonally non-adjusted) and by 7.9% year on year, up from 7.1% in August.

Country Report Turkey October 2015
Outlook for 2015-19: Political stability
Outlook for 2015-19: Election watch
Outlook for 2015-19: International relations
Outlook for 2015-19: Policy trends
Outlook for 2015-19: Fiscal policy
Outlook for 2015-19: Monetary policy
Outlook for 2015-19: International assumptions
Outlook for 2015-19: Economic growth
Outlook for 2015-19: Inflation
Outlook for 2015-19: Exchange rates
Outlook for 2015-19: External sector
Outlook for 2015-19: Forecast summary
Outlook for 2015-19: Quarterly forecasts
Data and charts: Annual data and forecast
Data and charts: Quarterly data
Data and charts: Monthly data
Data and charts: Annual trends charts
Data and charts: Quarterly trends charts
Data and charts: Monthly trends charts
Data and charts: Comparative economic indicators
Basic data
Political structure

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