Turkey: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Turkey
IMF Staff Country Reports, June 11, 2021
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- Turkey: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Turkey
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Bibliographic details
- Published: June 11, 2021
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513573175.002
Pandemic impact and macroeconomic outcome
- The human and economic toll of the COVID-19 pandemic in Turkey has been severe: "Thousands of lives have been tragically lost and many livelihoods compromised."
- Despite the pandemic, Turkey experienced positive economic growth in 2020 due to rapid monetary and credit expansion and large liquidity support.
- Rapid policy response and a sharp growth rebound set Turkey apart from many peers.
Emergent vulnerabilities and transmission channels
- Policy measures that supported growth also aggravated pre-existing economic and financial vulnerabilities:
- Higher inflation.
- Increased dollarization.
- A large shift in the current account position that increased pressure on the lira.
- Heavy foreign exchange sales that led to steep reserve declines from already-low levels.
Policy developments and shifts
- A policy shift in late 2020 emphasized:
- Tighter and more transparent monetary policy.
- Slower credit growth.
- The late-2020 policy shift was characterized as both welcome and necessary.
- The durability and depth of the policy shift were questioned in March 2021 after a change in central bank leadership:
- The lira weakened markedly.
- Interest rate spreads widened.
Subjects and keywords (as listed)
- Subjects: COVID-19, Financial institutions, Foreign exchange, Health, Inflation, International organization, Monetary policy, National accounts, Prices, State-owned banks
- Keywords: COVID-19, credit policy, Europe, fiscal policy coordination, FX rediscount credit repayment, Global, IFC portfolio implementation, IMF staff calculation, Inflation, policy uncertainty, State-owned banks
Content in this bundle
- 1turea2021001