The U.S.-based multinational banking and financial services company J.P. Morgan raised its estimate on Turkey's economic growth for 2017 from 3.8 percent to 4.6 percent thanks to its strong performance observed so far and noted that this growth will largely emanate from the economic activity in the second quarter. J.P. Morgan published a report on Wednesday, pointing out that the recently announced data showed an upward movement and that this situation points to the strength of the economy despite the considerable money tightening of the Central Bank of the Republic of Turkey (CBRT).
In the report, the reasons for these strong trends are listed as the sharp recovery in tourism, the incentives implemented by the government, such as tax cuts and the credit guarantee mechanism, the increase in exports along with strong European Union demand, political calm and the stronger confidence resulting from the stability in the currency. J.P. Morgan, on the other hand, noted that a slowdown is expected since some of these incentive measures will expire in the second half of the year.
Noting that the Credit Guarantee Fund is nearing its end due to the fact that almost all of it has been used and the credit ratios of the banks have started to increase, J.P. Morgan pointed out that tax cuts applied to white goods and furniture will end in September and companies will start paying the social security premiums deferred in the first quarter.
It also stated that economic activity is likely to slow down in the second half unless the government introduces new incentives.
The Turkish economy surpassed expectations in the first quarter, registering 5 percent gross domestic product (GDP) growth, which was partially attributed to surging exports and industrial production. As for the second quarter, both economists and professionals in the business world expect a better performance, outstripping the 5 percent growth of the first quarter.
Turkish Enterprise and Business Confederation (TÜRKONFED) Chairman Tarkan Kadooğlu previously highlighted that the better than expected economic performance of the first quarter proves the economic power and dynamism of the Turkish economy and said that 5 to 6 percent growth can be secured for the second quarter based on export and other economic data.
Emphasizing that growth is expected to continue until the end of this year, Kadooğlu said that the 5 percent growth seen in the first quarter of the year is a huge accomplishment which improves morale among business professionals in the business world. Moreover, based on industrial output data in July, which saw a 3.4 percent increase, and the 4.6 percent increase in industrial production on average in the second half of the year, economics professor Kerem Alkin also claimed that the Turkish economy could grow by 6.45 to 7.25 percent in the second quarter, pointing out that the average 2.1 percent increase contributed to the 5 percent GDP growth.