{
  "title": "Turkey: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Turkey",
  "publication": "IMF Staff Country Reports, December 26, 2019",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2019/12/26/turkey-2019-article-iv-consultation-press-release-staff-report-and-statement-by-the-48920",
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  "summary": "This 2019 Article IV Consultation with Turkey discusses that economic growth has since resumed, buoyed by expansionary fiscal policy, rapid credit provision by state-owned banks, and more favorable external financing conditions. The lira also recovered as market pressures abated.",
  "sections": [
    {
      "heading": "Economic activity and drivers",
      "content": "- Economic growth has since resumed, buoyed by expansionary fiscal policy.\n- Rapid credit provision by state-owned banks has supported the recovery.\n- More favorable external financing conditions contributed to the rebound.\n- The lira recovered as market pressures abated."
    },
    {
      "heading": "External adjustment and current account",
      "content": "- Import compression and a strong tourism season have contributed to a remarkable current account adjustment."
    },
    {
      "heading": "Inflation and monetary policy",
      "content": "- Inflation peaked at around 25 percent—five times the target—in October 2018, driven in large part by high exchange rate passthrough and rising inflation expectations.\n- Since the peak, inflation has fallen sharply due to:\n  - strong base effects,\n  - relative lira stability,\n  - a negative output gap.\n- Inflation expectations remain well above target.\n- The central bank cut policy rates by 1000 basis points since July 2019."
    },
    {
      "heading": "Banking, credit, and financial intermediation",
      "content": "- State-owned banks are supporting rapid credit growth.\n- Private banks have cut back on their lending.\n- State-owned banks have engaged in a major credit expansion which picked up pace in early-2019."
    },
    {
      "heading": "Key findings and implications",
      "content": "- Resumption of growth is driven by a mix of fiscal expansion and state-led credit growth rather than a private-sector credit revival.\n- The sharp decline in inflation reflects a combination of base effects and macroeconomic slack, but elevated inflation expectations pose ongoing risks.\n- Rapid credit expansion by state-owned banks suggests a potential shift in credit allocation and financial stability considerations.\n\nInternational Monetary Fund. Turkey: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Turkey, December 26, 2019.\n\n---\n\n Content in this bundle\n\n- 1turea2019001\n  - 1turea2019001 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 1turea2019001 (PDF){rel=\"external\" type=\"application/pdf\"}"
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    "Published: December 26, 2019",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9781513524641.002",
    "Economic growth has since resumed, buoyed by expansionary fiscal policy.",
    "Rapid credit provision by state-owned banks has supported the recovery.",
    "More favorable external financing conditions contributed to the rebound.",
    "The lira recovered as market pressures abated.",
    "Import compression and a strong tourism season have contributed to a remarkable current account adjustment.",
    "Since the peak, inflation has fallen sharply due to:",
    "The central bank cut policy rates by 1000 basis points since July 2019.",
    "Private banks have cut back on their lending.",
    "Resumption of growth is driven by a mix of fiscal expansion and state-led credit growth rather than a private-sector credit revival.",
    "The sharp decline in inflation reflects a combination of base effects and macroeconomic slack, but elevated inflation expectations pose ongoing risks.",
    "Rapid credit expansion by state-owned banks suggests a potential shift in credit allocation and financial stability considerations.",
    "**1turea2019001**"
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