Fitch Ratings raised its growth forecast for the Turkish economy in 2017 from its June forecast of 4.7 percent to 5.5 percent, the US rating agency announced on Monday.
„Fitch’s growth correction is once again ahead of Fitch’s expectations“, the agency said, stressing that the Turkish economy grew ahead of expectations in the first quarter (5.2 percent) and second quarter (5.1 percent) of this year.
The performance continued to be supported by various government incentives, including temporary fiscal measures and a leap in the Ministry of Finance’s commitment to the Credit Guarantee Fund, which has boosted lending to small and medium-sized enterprises, Fitch said.
In March, the new Credit Guarantee Fund came into effect to increase the total balance sheet of loans for industry and companies to 250 billion Turkish lira, about 70 billion US dollars, by providing treasury guarantees for losses from possible non-performing loans.
At the beginning of this year, the Turkish government also lowered a 6.7 percent special consumption tax on white goods such as refrigerators or washing machines to zero and offered a temporary interruption on VAT on furniture – from 18 percent to 8 percent. The aim is to support domestic demand.
„High-frequency indicators shows that the strong momentum will continue in the third quarter of 2017“, said Fitch. The year-on-year comparison is also favored by base effects due to the interruption of business activity caused by the failed coup attempt in the third quarter of 2016.
Fitch expects growth of more than 7% in the third quarter of 2017, and we have therefore raised our growth forecast for 2017 to 5.5% from 4.7% in June,“it goes on to say.
Last year, on 15 July, the country experienced a failed coup attempt, killing 250 people and injuring almost 2,200.
The Turkish economy grew by 3.2 percent last year, 6.1 percent in 2015 and 5.2 percent in 2014.