Turkish economy, which recorded a 6.6% growth on an annual basis, with strong credit growth’s heating effect, also showed a strong growth performance in 4Q20, in which the financial conditions tightened but economic activity and production channels remained open. Despite factors such as the stabilizing effect of the interest rate hikes on loan growth during this period and the service sector contraction due to Covid-19 restrictions, which were more heavily influenced by the end of the quarter; The strong image has been maintained in manufacturing, especially as demonstrated by industrial production. We expect the economy to grow by 6% in the 4Q20 period, and to grow by 2% throughout the year.
Thus, national income returns to its pre-pandemic levels. In this respect, it is important the whole 2020 shows a growth for economy. However, it should be kept in mind that this growth is also largely due to a credit boom, which helps recovery while at the same time causing instability in the currency and triggering inflation. The Central Bank had to tighten monetary policy as a result, and growth is likely to slow down, with the effect of two rate hikes after November at subsequent meetings. As inflation continues to tighten, additional monetary tightening will increase downside risks to growth.
With the effect of the open production channels, we think that the strong growth outlook, which also reveals industrial production data, will be confirmed on the 4Q20 GDP growth side. The demand stabilization effect brought about by the monetary tightening, on the other hand, will indicate the period of the lowest growth in the following quarter. For the next periods; The removal or easing of Covid restrictions with vaccination, the increasing economic activity and monetary cycle accordingly, with the second half of the year, if disinflation allows, some interest rate cuts and demand increase are factors that will affect the overall growth rate of the year. At the same time, we think that the base effect from 2020, which recorded a low growth, will work in favor, and in this context, we think that there may be a growth close to 5% in 2021, in line with the general consensus.
Kaynak Tera Yatırım
Hibya Haber Ajansı
Kaynak: Hibya Haber Ajansı