Goldman Sachs and Moody’s have raised their forecast for Türkiye’s 2022 economic growth, after the data showed the country extended a hot streak and grew more than expected in the second quarter.

Goldman Sachs said on Thursday it revised upward its gross domestic product (GDP) growth forecast for Türkiye for this year to 5.5% from 3.5%, while lifting its 2022 current account deficit forecast to $45 billion from $36 billion.

Moody’s said in a report on Wednesday it raised its 2022 growth estimate to 4.5%, up from 3.5%.

Goldman Sachs said the Turkish central bank’s foreign exchange reserves had risen sharply since the third week of June and that, with less of an external funding constraint, it was updating its macro forecasts and market views.

"The additional funding implies that the need to tighten policy to avoid an external funding gap has declined substantially, and we think policy-makers will use this space to support growth," it said in a note.

Data on Wednesday showed that Türkiye’s economy grew 7.6% year-over-year in the second quarter on strong domestic demand and exports.

The growth rate made Türkiye the second-fastest growing economy in the G-20 after Saudi Arabia, whose GDP expanded 11.8% in the second quarter.

Moody’s report said "strong credit impulse, policies supporting upward minimum wage adjustments and loose monetary policy have supported domestic consumption, while demand from trading partners and a weak lira have bolstered exports and tourism recoveries."

The credit rating agency said it expects inflation in Türkiye to fall back to 70% by the end of this year, and to 40% by the end of next year. The inflation reached nearly 80% in July, a 24-year high.

Moody’s noted that manufacturing activity is expanding in emerging market countries including Türkiye, Brazil, India and Indonesia.

The rating agency lowered the growth forecast of G-20 economies to 2.5% for 2022 and 2.1% for 2023, citing "significant deterioration in the outlooks of several major economies since the start of the year."

Previous projections made in May estimated G-20 economies to expand by 3.1% this year and 2.9% next year. Among advanced economies, the U.S. is forecast to grow 1.9% and the euro area is estimated to expand 2.5% in 2022.

For emerging nations in the G-20, Russia’s economy is expected to contract 7% this year due to sweeping Western sanctions over Moscow’s invasion of Ukraine, while Saudi Arabia is projected to grow 7.2% due to an increase in its oil production and high oil prices benefiting its economy.