Fitch Expects Turkey’s Economy to Shrink by 3 Percent in 2020

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Fitch Ratings agency has updated its Global Economic Outlook (GEO) forecasts amid novel coronavirus (COVID-19) pandemic.

In a special report entitled "Crisis Update May 2020 - Coronavirus Shock Broadens," Fitch Ratings has estimated that the global economy will shrink by 4.6 percent by the end of this year. Fitch previously forecasted that the global economic shrinkage would be 3.9 percent.

"World Gross Dmoestic Product (GDP) is now forecast to fall by 4.6 percent in 2020 compared to a decline of 3.9 percent predicted in our late-April GEO. This reflects downward revisions to the eurozone and the UK and, most significantly, to emerging markets (EM) excluding China," Brian Coulton, the Chief Economist at the Fitch Ratings, has commented. 

As for the year ahead, Fitch Ratings has been expecting that the economy will grow by 5.1 percent globally in 2021.

"It will take a long time to return to normality: we are unlikely to reach pre-virus levels of GDP before mid-2022 in the US and significantly later in Europe," the agency has commented further and added:

"The severity of the labour market shock in the US and elsewhere and ongoing social distancing will weigh heavily on the post-crisis recovery."

'Economy of Turkey to shrink by 3 percent'

Sharing its forecasts on a regional basis, Fitch Ratings has also announced that they expect the economy of the Eurozone to shrink by 8.2 percent this year. In its previous statement, the agency announced this figure as 7 percent. The economy is expected to grow by 4.4 percent in 2021 in the Eurozone, according to the updated version of the Fitch report.

As for Turkey, Fitch Ratings expects that the economy of the country will shrink by 3 percent this year and grow by 5 percent in 2021.

IMF also expects 5-percent shrinkage in Turkey

In a global economic outlook report released by the International Monetary Fund (IMF) in April, it was estimated that Turkey's economy might shrink by 5 percent this year and unemployment rate could rise to 17.2 percent.

For 2021, the IMF expected the economy to grow by 5 percent and the unemployment rate to be 15.6 percent in Turkey. The country's unemployment rate was 13.7 percent at the end of 2019.

The IMF projected an inflation rate of 12 percent for Turkey at the end of both this year and 2021. Its projection for the country's current account balance was 0.4 percent and -0.2 percent for 2020 and 2021. (TP/SD)