Leading Turkish business association TUSIAD said on Wednesday, May 23, it expected the economy to contract by 5.8 percent this year, compared to the government's forecast for three percent contraction.
In a quarterly report published on Wednesday, it said gross national product was expected to fall 10.3 percent year-on-year in the second quarter of the year, after a financial crisis that devastated the economy in February and March.
Turkey was forced to float the lira on February 22, abandoning a crawling currency peg that had been the centerpiece of a three-year IMF-backed disinflation program. The lira has since lost nearly 40 percent of its value against the dollar.
TUSIAD said it expected wholesale price inflation to reach 74 percent at the end of this year with consumer price inflation at 66 percent. The government is targeting 57.6 percent WPI and 52.5 percent CPI at the end of the year.
The report said the lira exchange rate was expected to be 1,268,468 to the dollar by the end of the year. That compares to Wednesday's level of 1,116,000 lira to the dollar on the central bank brokered spot market, and would represent a 46 percent depreciation since before the float in February.
The business group was more optimistic on the current account than the government, which is aiming to break even, forecasting a current account surplus of $3.1 billion.
Turkey last month sealed a $15.7 billion rescue package from the IMF and World Bank in return for major reforms including a shake-up of the banking sector and privatizations. The government has said it expects growth to pick up in the second half of the year. ― (Reuters, Ankara)
© Reuters 2001
© 2001 Mena Report (www.menareport.com)