Deloitte, one of the "Big Four" professional services firms, has upgraded Turkey’s growth estimates following a robust first quarter and a shrinking deficit.
It upgraded the estimate for year-end growth from between 2 and 2.5 percent to 3.5 percent.
Deloitte Turkey economist Murat Ucer said Turkey’s 4.3 percent growth in first quarter of 2014 and a strong contribution from exports was very positive. But he warned inflation levels and the current account deficit continue to pose a risk, despite a downward shift over the past five months.
He said: “Inflation is well above the target levels and the current account deficit, despite a recovery, is expected at 5.5 to 6 percent of GDP [gross domestic product], a level which would be deemed high.”
Turkey should focus on increased productivity to achieve more than 4 percent growth, moderate inflation and a moderate current account deficit, Deloitte’s report noted.
It added: “GDP growth is expected to stand at 3.5 percent, below the official target but above our previous estimations. Improvement in external conditions, moderate slowdown in demand and high public expenditure are supportive factors for this assessment.”
Deloitte anticipates further interest rate cuts from the Turkish Central Bank in the near future.