forex trading outlook today - Turkish lira forecast 2012 : Turkey's economy will expand a faster-than-expected 7.4% this year, but output will slow sharply in 2012 amid gathering global economic risks, the Organization for Economic Cooperation and Development said Monday.
It said Turkey's large current-account deficit remains a key risk despite policy efforts to rebalance the fast-growing economy.
The 2011 growth prediction, made in the Paris-based OECD's November economic outlook report, is a significant upgrade from the 6.5% expansion it predicted in May. But the OECD has sharply downgraded its 2012 forecast to 3.0%, from a 5.3% forecast in May, amid slowing demand and deteriorating global conditions.
The more bearish 2012 outlook brings the OECD in line with the International Monetary Fund, which in September slashed its 2012 forecast to 2.5%, citing mounting global risks and Turkey's widening economic imbalances.
The OECD report said: "Very strong growth in early 2011, driven by private consumption and investment, has been curbed by credit containment policies and deteriorating global conditions. As a result, real GDP growth is projected to slow to 3% in 2012."
The Turkish economy expanded 8.8% in the second quarter, far exceeding economists' expectations and outstripping China to post the fastest growth of any G20 economy in the first half of the year.
Turkey's hot economy stands in contrast to those of most countries in the neighbouring European Union, but in what is fast emerging as a Turkish paradox, foreign investors aren't rushing to snap up assets. The lira has fallen more than 30% against the dollar since its highs of November last year.
A key concern in markets, economists say, is what action the new government will take to control a ballooning current-account deficit that forecast to hit almost 10% of gross domestic product. That imbalance, along with rising inflation, is seen as a sign of the economy overheating.
The OECD forecasts the current-account deficit to hit 9.8% of GDP this year, easing to 8.0% in 2012. That deficit will continue to be largely funded by portfolio flows, although the ratio of fixed investment covering the deficit is rising, the Paris-based organization said.
The November economic outlook said the depreciation of the lira will help exports, but could also spur higher inflation. Turkish consumer prices rose at their fastest monthly pace in nine years in September, feeding fears that inflation could remain elevated, further clouding the outlook.
The OECD also warned that a continued weakening of the currency could discourage capital inflows, which are necessary to sustain the economy's growth and to help finance the current-account deficit.
The OECD, while praising Turkey's economic fundamentals, is not the only organization to highlight risks to the outlook. Credit-ratings agency Fitch on Thursday lowered Turkey's outlook to stable from positive, citing the challenge Turkey faces of reducing inflation and its large current-account deficit against the backdrop of a deteriorating global economy.
It said Turkey's large current-account deficit remains a key risk despite policy efforts to rebalance the fast-growing economy.
The 2011 growth prediction, made in the Paris-based OECD's November economic outlook report, is a significant upgrade from the 6.5% expansion it predicted in May. But the OECD has sharply downgraded its 2012 forecast to 3.0%, from a 5.3% forecast in May, amid slowing demand and deteriorating global conditions.
The more bearish 2012 outlook brings the OECD in line with the International Monetary Fund, which in September slashed its 2012 forecast to 2.5%, citing mounting global risks and Turkey's widening economic imbalances.
The OECD report said: "Very strong growth in early 2011, driven by private consumption and investment, has been curbed by credit containment policies and deteriorating global conditions. As a result, real GDP growth is projected to slow to 3% in 2012."
The Turkish economy expanded 8.8% in the second quarter, far exceeding economists' expectations and outstripping China to post the fastest growth of any G20 economy in the first half of the year.
Turkey's hot economy stands in contrast to those of most countries in the neighbouring European Union, but in what is fast emerging as a Turkish paradox, foreign investors aren't rushing to snap up assets. The lira has fallen more than 30% against the dollar since its highs of November last year.
A key concern in markets, economists say, is what action the new government will take to control a ballooning current-account deficit that forecast to hit almost 10% of gross domestic product. That imbalance, along with rising inflation, is seen as a sign of the economy overheating.
The OECD forecasts the current-account deficit to hit 9.8% of GDP this year, easing to 8.0% in 2012. That deficit will continue to be largely funded by portfolio flows, although the ratio of fixed investment covering the deficit is rising, the Paris-based organization said.
The November economic outlook said the depreciation of the lira will help exports, but could also spur higher inflation. Turkish consumer prices rose at their fastest monthly pace in nine years in September, feeding fears that inflation could remain elevated, further clouding the outlook.
The OECD also warned that a continued weakening of the currency could discourage capital inflows, which are necessary to sustain the economy's growth and to help finance the current-account deficit.
The OECD, while praising Turkey's economic fundamentals, is not the only organization to highlight risks to the outlook. Credit-ratings agency Fitch on Thursday lowered Turkey's outlook to stable from positive, citing the challenge Turkey faces of reducing inflation and its large current-account deficit against the backdrop of a deteriorating global economy.
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