Turkey: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Turkey

International Monetary Fund

No 2018/110, IMF Staff Country Reports from International Monetary Fund

Abstract: Growth rebounded sharply in 2017, helped by strong policy stimulus in the wake of the 2016 post-coup attempt slump and by favorable external conditions. Although expansionary policies were initially warranted, they are no longer appropriate as the economy is showing clear signs of overheating. Monetary policy appears too loose and its credibility is low; and on- and off-budget fiscal policies (including credit guarantee schemes and PPP activities) are expansionary and risk undermining Turkey’s hard-earned fiscal credibility. As a result, the economy faces internal and external imbalances: a positive output gap, inflation well above target, and a current account deficit of more than 5 percent of GDP. Meanwhile, political uncertainty and regional instability remain elevated, and the integration of the many refugees poses challenges.

Keywords: ISCR; CR; authority; public-private partnership; policy; labor market; economy; inflation spillover; state loan guarantee; impairment signal; quality weakness; commercial loan; growth contribution; headline CPI inflation; Inflation; Loans; Public investment and public-private partnerships (PPP); Global (search for similar items in EconPapers)
Pages: 82
Date: 2018-04-30
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