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World Bank cuts Turkey growth outlook to 3.5%

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Staff writer ▼ | July 2, 2015
The World Bank lowered its 2016 and 2017 growth outlook for Turkey as political uncertainty continues after the parliamentary election and kept it growth forecast for the country for this year at 3%.
Expectations   An uncertain political outlook in Turkey
The growth forecast for Turkey for 2016 was cut to 3.5% from its previous forecast of 3.9% in April and for 2017 was cut to 3.5% from 3.7%, against the backdrop of an uncertain political outlook in a gradually tightening global financial environment, the World Bank said in its regular economic report for the country.

"We expect private consumption to lose momentum and investment to remain depressed in the second half of the year, as households and corporates are likely to postpone key spending decisions until political uncertainty is resolved," the World Bank said in the report.

Turkey's economy grew 2.9% last year, missing the government's 3.3% target and slowing from a 4.2% growth rate in 2013.

The World Bank said Turkey`s current-account deficit narrowed since January, thanks to gold exports. "However, the gold adjusted deficit, a more accurate measure of external demand, deteriorated due to persistent weaknesses in Turkey's trading partners," the World Bank said. It raised Turkey's 2015 current-account deficit forecast to 4.6% of gross domestic product from its previous projection of 4.4% in April.

The World Bank said despite declining food prices, lira depreciation and increases in oil prices pushed inflation higher. Turkey's annual inflation rate rose to 8.09% in May from 7.91% in April.

The World Bank kept its inflation forecast for Turkey in 2015 at 7% under the assumption that further pressures on the exchange rate can be contained.

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