The Wall Street bank JP Morgan and British multinational bank Barclays have raised their 2021 growth forecasts for the Turkish economy.

The upward revision came after data on Monday showed that the Turkish economy was one of only a few globally to expand last year.

In light of the data, Barclays lifted its forecast to 4.4% from 3.6%, citing Turkey's robust performance since the start of the year, while JP Morgan raised its projection to 4.8%, up from its 4.6% forecast from just a month ago.

Goldman Sachs, on the other hand, cut on Monday its 2021 growth projection for the country to 5.5% year-on-year from 6%, citing the latest 2020 gross domestic product (GDP) data coming in below forecasts.

The bank just last month raised this year’s expectation to 6% from 4%.

The economy grew a less-than-expected but still strong 5.9% in the fourth quarter and 1.8% in 2020 as a whole, according to the data that showed Turkey had joined China as a large economy that managed to avoid a contraction amid the pandemic.

"On the back of a stronger-than-expected start to the year and the improved prospects related to the global growth outlook, we revise up our growth forecast for Turkey by 0.8 pp (percentage points) to 4.4% y/y (year on year) for 2021," Barclays’ Ercan Ergüzel said in a note to clients.

Leading indicators for the first quarter of the year – such as the Purchasing Manager Index (PMI) for the manufacturing sector, which slipped from 54.4 in January to 51.7 in February, showed economic activity maintaining a strong trend in January, before signaling signs of a slowdown in February.

Those signs of a slowdown in economic activity would be more visible from March onwards, said Ergüzel.

Separately, Industry and Technology Minister Mustafa Varank Tuesday said the manufacturing industry was the biggest contributor to Turkey’s GDP performance last year.

Varank said the manufacturing industry, which expanded 10.5% year-on-year in the last quarter of 2020, was the biggest contributor to the country’s GDP growth rate during the October-December period.

The minister also said the rise in production activities reflects on the employment side.

"The number of employees in the manufacturing industry rose by 325,000 in December 2020, up by 8.6% to 4.1 million compared to the same month previous year."

Over the same period, machinery and equipment investments increased by 38.7%, which shows the manufacturing industry will continue to expand in the coming period, Varank added.

JP Morgan said the economy grew in parallel to its expectations, becoming one of few countries to have grown in 2020.

The Wall Street bank had last month hiked its 2020 view for the country to 1.9% from 1.1%, while it raised the forecast for this year to 4.6%, from 3.3%, previously.

Such growth during the pandemic was propelled by the credit incentive in the first half of the year, the bank said, resulting in consumption being one of the main drivers behind the growth in the second half of the year.

Yet, the bank said such growth came at a price in the form of increased inflation risks and expanding current account deficit. Thus, it said it is a relief to see growth slowing down in the last quarter.

"On the back of the monetary tightening, we expect growth to lose further momentum, resulting in improvements in price and balance of payments dynamics in the first half of the year," the bank said.

"Although 2020 growth was in line with our expectations and high-frequency data already show further moderation in growth dynamics, we have revised up our 2021 growth forecast modestly to 4.8% from 4.6%, mainly reflecting stronger global growth," it added.

Barclays said an expecting economic slowdown in the first half of this year "may not be sufficient to deliver a major correction on the external balance, especially if energy prices remain high."

"The downside surprise today mechanically implies a lower growth forecast for 2021," Goldman Sachs’ Murat Unur wrote in a note to clients.

"Nevertheless, it also shows that the moderation in household consumption began a quarter earlier than we expected so the normalization we factored in for 2021Q1 now appears too large."