Politics, Debt Take Toll on Turkey

Increased political uncertainty, a fall in tourism, and high levels of corporate debt are taking their toll on Turkey’s economy, where growth is expected to fall to 2.9% this year, the International Monetary Fund said, Anadolu Agency reported. The global lender also said Turkey’s current monetary stance, which balanced the need to contain inflation with a slowing economy, should be maintained without further easing. “Favorable external conditions have helped so far, but external financing needs remain large and limit fiscal space. Nevertheless, some fiscal loosening is appropriate to support the economy. Macro-prudential measures should be strengthened to lower foreign exchange risk,” noted the IMF in a statement following consultations to assess its financial and economic state. The IMF is the latest foreign institution to signal concern about the political situation in Turkey. “The Turkish economy has withstood several shocks. However, increased political uncertainty, a sharp fall in tourism revenues, and a high level of corporate debt are all taking a toll,” it noted.