TurkeyIMF: Inflation to fall gradually in Turkey

2021-02-19 11:02

IMF announced that inflation will fall in Turkey

The International Monetary Fund (IMF) officials, made statements related to Turkey’s economic policy change and said they welcomed the improvements. Donal McGettigan, The IMF Turkey Desk Chief, said that they foresee a gradual fall in inflation and said “change of policy that allows the improvement of credibility will also gradually reduce inflation.” McGettigan added that the tightened monetary policy and sustainable practices is vital for the investor confidence. According to the estimates of the IMF; Turkey will return to its potential growth of around 3.5 percent with 2022. Targeted structural reforms for the financial sector, labor market and corporate sector will help mitigate the possible long-term effects of the pandemic.

Sharp recovery has been achieved in the economy

The International Monetary Fund had expected to sustainability of the positive growth of Turkey’s economy in 2021, and reported that the country’s economy projected 6 percent growth this year.

Turkey entered 2020 with pre-existing vulnerabilities, but with the first policy intervention to the country’s economy due to the pandemic has led to a sharp recovery. In the statement of the IMF, it was emphasized that the tightening monetary policy, the loosening of temporary regulatory measures and the apparent slowdown in state-owned bank loans since the end of 2020 have helped to limit the pressure on the Turkish lira and rebuild trust to the economy. It was pointed out that rebalancing with policies implemented over time will form the basis of more durable medium-term growth, while fiscal structural reforms will support consolidation and reduce fiscal risks.

5 percent growth was predicted

In the growth forecast previously had been announced by the IMF were not been changed, foresaw the country’s economy to contract 5 percent this year, the institution recently predicted the country’s economy would grow 5 percent in 2021. In the last statement, the international credit rating agency Standard & Poor’s also drew attention to Turkey’s monetary policy in 2020, which significant changes took place in the last period, would help to control the high inflation if the steps taken will be continue as expressed earlier.

The IMF stated that 81 countries asked for financial aid when the pandemic spread all over the world. However despite all the pressure Turkey did not ask the IMF to help. IMF Europe Director Poul Thomsen expressed that “Turkey and Russia is not among the countries that ask help from the IMF.”

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