WOOD Flash – Turkey macro: NEP signals sensible fiscal management and preference for high (not runaway) inflation
The medium-term programme (the new economic programme (NEP)) presented by Finance Minister Albayrak yesterday (29 September) anticipates a positive GDP growth outlook for 2020E (0.3%), set to increase to 5.8% in 2021E. This would make Turkey the only country in the WOOD universe with positive GDP growth in 2020E. The fiscal outlook is set to remain under control, with budget deficit is set to decline gradually from a 2020E target of -4.9% to -3.5% in 2023E.The MTP is important for understanding the framework the Turkish government is working with, signalling not only the fiscal outlook, but also changes in the government stance. Back in 2018, the MTP showed both realistic assumptions and signals of fiscal consolidation. Ahead of a recession, this was perceived positively and, for example, bolstered the belief that Turkey did not need IMF support. This time, we see the GDP projections as optimistic, but we agree with the direction: the leading survey data show that Turkey is likely to outperform all the other countries under our coverage.
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