Net exports are expected to drive growth in 2022 , offsetting the drag from contractions in investment and private consumption
“ Net exports are expected to drive growth in 2022 , offsetting the drag from contractions in investment and private consumption . Inflation is projected to accelerate further to 61 per cent in 2022 , assuming no change in the monetary policy stance and high global commodity prices . In 2022 , lower export growth and rising import prices are expected to widen the current account deficit to 6.4 per cent of GDP . The general government deficit is projected to widen to 5.2 per cent and 5.1 percent in 2022 and 2023 , respectively , driven by rising public consumption , interest expenses and current transfers ,” it added .
The COVID-19 effect
Above and below : Sheet metal production at Ford car factory at Izmit , Turkey ( Shutterstock . com ).
As in other countries , the human and initial economic toll of the pandemic in Turkey has been severe . Thousands of Turkish lives have been tragically lost and many livelihoods compromised .
“ However , while the initial collapse in economic activity was similar to other countries , the recovery has been remarkable , setting Turkey apart from its peers . Large interest rate cuts , rapid credit provision by state-owned banks , administrative and regulatory credit incentives and extensive liquidity support meant that Turkey was among the few countries to experience positive economic growth in 2020 ,” said the International Monetary Fund ( IMF ).
“ Employment has partially recovered along with the rebound in economic activity , although labour market conditions remain challenging particularly among females and the young . Public debt remains contained , at around 40 per cent of GDP , as direct fiscal support — including to workers and vulnerable households — has been relatively modest , with the central government deficit widening only marginally in 2020 . Some fiscal space remains available , albeit somewhat limited by contingent liabilities and potential debt rollover pressures ,” it continued .
But the same policies that buoyed growth also exacerbated preexisting vulnerabilities , with buffers now lower than before the pandemic . With high external financing needs , sizeable domestic foreign-
exchange deposits and low reserve buffers , the economy remains vulnerable to shocks and to changes in sentiment at home and abroad .
In the financial sector , IMF Directors called for further reining in and refocusing state-owned bank credit growth , as well as carefully monitoring bank foreign exchange liabilities . They encouraged gradually reversing regulatory flexibility and loan deferrals as the pandemic recedes . Most IMF Directors agreed that , once the pandemic fades , a third-party asset quality review would help in better understanding underlying bank health . Additional reforms to strengthen regulatory , resolution and AML / CFT frameworks would also help financial stability .
IMF Directors also called for focused structural reforms to minimise the long-term adverse effects of the pandemic . They recommended focusing on female labour force participation and youth employment , increasing labour market flexibility and ensuring that viable , but temporarily insolvent , firms are restructured while winding down unviable firms .
Turkish machinery sector
Historically , the Turkish machinery industry more than quadrupled its revenues to US $ 21 billion and doubled its workforce to 244,000 over the ten years to 2019 . The end-use sectors that consume Turkish machinery are agriculture ; automotive ; construction ; food and beverages ; electrical equipment ; chemicals ; energy and textiles . Before the pandemic , Turkey had increased its import / export ratio from 30 % to 65 % since 2003 ( almost tripling its imports ), becoming the 24th largest importer in the world .
According to Turkey ’ s Investment Office , there are over 17,000 active local and international companies in the Turkish machinery sector and 244,000 employees . The total export value of Turkish machinery industry in 2020 was US $ 18.5 billion . The machinery sector generated US $ 21 billion in total revenue in 2019 . Major export markets for Turkish machinery are Germany , UK , France and Italy .
Automotive manufacturing in Turkey .
Machinery manufacturing continues to be one of the key growth drivers of the Turkish economy
40 | www . ismr . net | ISMR July / August 2022