(MENAFN- The Peninsula) The Peninsula
DOHA: Turkey's economy is in the midst of a strong upturn due to a $60bn government backed credit guarantee fund (CGF), fiscal stimulus and robust external demand.
Real GDP growth was an estimated 6.8 percent in 2017 and is projected to moderate thereafter to 5.4 percent in 2018 and 5.3 percent in 2019 as some stimulus measures are partly scaled back, QNB Group noted in its 'Turkey Economic Insight 2017, released yesterday.
According to the research note, inflation rose to 11.9 percent at end-2017 reflecting oil price gains, a weaker lira (TRY) and strong domestic demand due to stimulus measures. Inflation should gradually ease to 8.5 percent by end- 2019 as the lira declines by less than it did in 2017 and as oil and other commodity prices are not expected to increase as much.
QNB projects Turkey's current account deficit to widen slightly from 5.6 percent of GDP in 2017 to 5.9 percent in 2018 and 2019 as import growth is expected to outpace exports due to strong domestic demand and higher oil prices. 'As a result we expect the lira to weaken as well, declining from an average of 3.6 per USD in 2017 to 3.8 and 4.0 in 2018 and 2019, QNB analysts said.
Banking sector growth is expected to remain robust on the back of the high lending growth as a result of the CGF.
Asset quality will continue to improve with non-performing loans expected to decline from 2.9 percent in 2017 to 2.8 percent by 2019.
Profitability and capitalisation are expected to remain strong, the former reached a four-year high in 2017, with return on equity over 20 percent and the capital adequacy ratio rose to over 16 percent in 2017.
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