Growth data for the first nine months of 2013 show a discernible improvement in the economy over the previous year. Turkey’s economy maintained its recovery trend with 4.4% growth in the third quarter of 2013 compared to the same period in 2012. However, the Central Bank of Turkey’s inflation rate target of 6.8% was exceeded, with inflation reaching 7.4% as of the end of 2013.
While the economic stimulus policies implemented during the first half of 2013 revived domestic demand and succeeded in keeping the current account deficit under control, the impact of a depreciation in the value of the Turkish Lira led to higher than forecast inflation.
As well as concerns relating to Turkey’s domestic market and policy, global markets also continued to impact the Turkish economy. The FED’s announcement at its December 2013 meeting of a reduction in its bond-buying program from January instigated an increase in money outflows from Turkey, which remains an emerging economy.
(This article features excerpts from the full report – please download it here)