Turkey Economic Monitor, May 2018 : Minding the External Gap

A strong policy response - on the back of fiscal buffers, a strong financial system, and favorable external conditions - enabled Turkey to recover from its shock of 2016, with growth accelerating to 7.4 percent in 2017. The outcome of supply constr...

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Main Author:	World Bank Group
Format:	Report
Language:	English
Published:	World Bank, Washington, DC 2018
Subjects:	ECONOMIC GROWTH ECONOMIC OUTLOOK VOLATILITY RECOVERY RISKS BUSINESS CYCLES MONETARY POLICY MACROECONOMIC POLICY FISCAL TRENDS PRODUCTIVITY DEBT BANKING
Online Access:	http://documents.worldbank.org/curated/en/551541527656096358/Turkey-economic-monitor-minding-the-external-gap http://hdl.handle.net/10986/29918

id	okr-10986-29918
recordtype	oai_dc
spelling	okr-10986-299182021-05-25T09:15:12Z Turkey Economic Monitor, May 2018 : Minding the External Gap World Bank Group ECONOMIC GROWTH ECONOMIC OUTLOOK VOLATILITY RECOVERY RISKS BUSINESS CYCLES MONETARY POLICY MACROECONOMIC POLICY FISCAL TRENDS PRODUCTIVITY DEBT BANKING A strong policy response - on the back of fiscal buffers, a strong financial system, and favorable external conditions - enabled Turkey to recover from its shock of 2016, with growth accelerating to 7.4 percent in 2017. The outcome of supply constraints and demand impulse are reflected in high inflation; a large current account deficit; and currency volatility. The developments are weighing on private sector confidence despite the ongoing boost to sales, employment, and profits. Enabling an orderly adjustment is important for productivity and potential output. Turkey has been prone to large economic swings in the past. The greater the volatility in growth, the more pronounced is the negative impact on productive investment and efficiency of resource allocation. The possibility for monetary policy to respond to adverse external developments is more challenging. A combination of high inflation (due to demand pressures, exchange rate passthrough, and higher production costs) on the one hand, and rising (and positive) policy rates on the other, creates challenges for a monetary stimulus in the event of an external shock. This challenge is exacerbated by the need to cool credit expansion, which has been above its long-term trend. 2018-06-20T16:55:18Z 2018-06-20T16:55:18Z 2018-05 Report http://documents.worldbank.org/curated/en/551541527656096358/Turkey-economic-monitor-minding-the-external-gap http://hdl.handle.net/10986/29918 English CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Economic & Sector Work :: Economic Updates and Modeling Economic & Sector Work Europe and Central Asia Turkey
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ECONOMIC GROWTH ECONOMIC OUTLOOK VOLATILITY RECOVERY RISKS BUSINESS CYCLES MONETARY POLICY MACROECONOMIC POLICY FISCAL TRENDS PRODUCTIVITY DEBT BANKING
spellingShingle	ECONOMIC GROWTH ECONOMIC OUTLOOK VOLATILITY RECOVERY RISKS BUSINESS CYCLES MONETARY POLICY MACROECONOMIC POLICY FISCAL TRENDS PRODUCTIVITY DEBT BANKING World Bank Group Turkey Economic Monitor, May 2018 : Minding the External Gap
geographic_facet	Europe and Central Asia Turkey
description	A strong policy response - on the back of fiscal buffers, a strong financial system, and favorable external conditions - enabled Turkey to recover from its shock of 2016, with growth accelerating to 7.4 percent in 2017. The outcome of supply constraints and demand impulse are reflected in high inflation; a large current account deficit; and currency volatility. The developments are weighing on private sector confidence despite the ongoing boost to sales, employment, and profits. Enabling an orderly adjustment is important for productivity and potential output. Turkey has been prone to large economic swings in the past. The greater the volatility in growth, the more pronounced is the negative impact on productive investment and efficiency of resource allocation. The possibility for monetary policy to respond to adverse external developments is more challenging. A combination of high inflation (due to demand pressures, exchange rate passthrough, and higher production costs) on the one hand, and rising (and positive) policy rates on the other, creates challenges for a monetary stimulus in the event of an external shock. This challenge is exacerbated by the need to cool credit expansion, which has been above its long-term trend.
format	Report
author	World Bank Group
author_facet	World Bank Group
author_sort	World Bank Group
title	Turkey Economic Monitor, May 2018 : Minding the External Gap
title_short	Turkey Economic Monitor, May 2018 : Minding the External Gap
title_full	Turkey Economic Monitor, May 2018 : Minding the External Gap
title_fullStr	Turkey Economic Monitor, May 2018 : Minding the External Gap
title_full_unstemmed	Turkey Economic Monitor, May 2018 : Minding the External Gap
title_sort	turkey economic monitor, may 2018 : minding the external gap
publisher	World Bank, Washington, DC
publishDate	2018
url	http://documents.worldbank.org/curated/en/551541527656096358/Turkey-economic-monitor-minding-the-external-gap http://hdl.handle.net/10986/29918
_version_	1764470707852410880

Turkey Economic Monitor, May 2018 : Minding the External Gap

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