International ratings agency Fitch have forecasted the Turkish economy to remain on a growth path, predicting a GDP growth rate of over 3% for both this year and next. The agency’s report ‘Global Economic Outlook – May 2016′ predicts that the economy will expand at a rate of 3.5 % this year and 3.6 % in 2017.
Fitch said that a recent 30 % increase in the minimum wage is expected to boost domestic consumption, one of main drivers of GDP growth.
Fitch expects inflation to moderate to 8.2 %, 7.7 % and 7.5 % in 2016, 2017 and 2018 respectively.
Based on a weighted average of 20 of the largest advanced and emerging market countries, growth has been forecast at an average of 1.7% for 2016.
The report said that the U.S., the world’s largest economy with a GDP of approximately $18 trillion, is now expected to grow by just 1.8 percent, the first sub 2% growth rate since 2013.
Fitch believes this development is not bad news for everyone as it may offer respite to emerging markets which are significantly pressured by the appreciation in the U.S. dollar. “The weakening in the U.S. dollar since late 2015 has also helped ease pressure on Euro Monetary Fund borrowers and currencies,” Fitch said.
Among the larger emerging market economies, India, Poland, Turkey and South Korea are all large net commodity importers and will be the main beneficiaries (in terms of real income terms) from the fall in commodity prices.