Citigroup Revised Turkey's Growth Forecast

Citigroup, by evaluating the economic environment after the change of governorship in the CBRT, decreased its growth expectation for Turkey.

Citigroup revised Turkey's growth forecast. Citigroup evaluated the environment after the management change in the Central Bank of the Republic of Turkey (CBRT) repeatedly. However, it changed its inflation expectations for Turkey upwards. It updated its growth expectation downwards. In the report published by the bank, it was noted that they updated their macroeconomic expectations for Turkey due to the increased risk premium following the change in the CBRT governorship. Citigroup stated that they have raised their inflation targets from 11.7 percent to 15 percent this year, due to cost-based price pressures, weakening exchange rates and rising service prices, despite the strong base effect. Noting that the statements made after the new governor change at the Central Bank calmed the concerns of interest rate cuts and policy changes, Citigroup said that they do not expect interest rates to change unless there is a significant improvement in the inflation outlook and capital inflows. Expecting a decrease in economic activity in the second quarter due to high risk premiums and exchange rate volatility, according to a strong growth in the first quarter of 2021, the bank reported that it reduced its growth forecast for this year from 4 percent to 3.4 percent. Underlining that they expect a significant squeeze on the import side for the rest of the year, the institution noted that they revised their current account deficit estimates from 4 percent of GDP to 1.2 percent.