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Standard & Poor's Expects Turkey's Inflation to Rise

Standard & Poor's Expects Turkey's Inflation to Rise

Sunday, 4 August, 2019 - 12:30
A worker checks textile machines in the southern Turkish city of Diyarbakir (Reuters)
Ankara - Saeed Abdulrazzak

In a report published on Saturday assessing the economic situation in Turkey, credit rating agency Standard & Poor's expected a real GDP contraction in the country up to 0.5 percent this year and a three percent increase next year.

However, Turkish Finance Minister Berat Albayrak said last week that more than $10 billion in foreign investment had entered the country since May.

“The Turkish economy will enter more positive period by the second half of the year, leaving all the political uncertainties behind,” Albayrak said.

S&P expected inflation in Turkey to amount to 15.2 percent this year, 11.2 percent in 2020 and nine percent in 2021.

These rates exceed the expectations announced by the Central Bank of Turkey last Wednesday.

The Central Bank expected the inflation rate to reach 13.9 percent by the end o 2019 and to continue declining next year to reach 8.2 percent and 5.4 percent by 2021.

Turkey’s annual consumer price inflation rose to 19.71 percent in March, falling from the 15-year high above 25 percent in October, driven by the collapse of the Turkish lira, starting from August 2018.

Back then, the Turkish Lira lost 40 percent of its value and fell to 7.25 liras per dollar, causing a currency crisis that wiped nearly 30 percent off the value of the lira.

Turkey’s Central Bank Governor Murat Uysal said the bank’s forecasts would be met by a tight monetary policy focused on reducing inflation.

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