I don't think many people would argue with Simsek here. Turkey has had a soft landing, relative to its peers, albeit it has been a steep descent from the 8-9% growth posted over the prior two years. The positive is that it has also brought a rebalancing in the economy away from domestic demand to net exports, and this has cut the current account deficit from 10% of GDP to nearer to 7%.

Simsek and the CBRT would claim that this was policy induced. I would contend that this is only part of the story, and a combination of factors came together to take the heat out of the economy, including early year FX weakness and volatility, heightened political risk in the region (eg Syria), plus also uncertainty in Europe and the eurozone which all told encouraged domestic consumers to pare back consumption.

For the year ahead I would expect a gradual recovery, with 4% plus real GDP growth a realistic target/assumption, albeit inflation might prove quite sticky. I expect monetary policy from the CBRT to be much more cautious going forward, with stability and gradual recovery appearing as the buzz words.

Source: bne