IMF lowers Turkey’s growth forecast to 2.7 percent in 2022

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The International Monetary Fund (IMF) has released its World Economic Outlook report titled "War Sets Back the Global Recovery".

Accordingly, the IMF has lowered its 2022 global economic growth forecast, as the war between Russia and Ukraine continues.

With the recent revision in the numbers, the global economy is now expected to expand by 3.6 percent this year, down 0.8 percentage point from the previous growth estimate of 4.4 percent made in January.

As for Turkey, its economy is now estimated to expand by 2.7 percent this year, down from the previous forecast of 3.3 percent. While the IMF foresaw that Turkey's economy would also expand by 3.3 percent next year, this forecast has also been reduced to 3 percent.

While the US economy is now estimated to grow by 3.7 percent this year, down from the previous forecast of 4 percent, the UK's economy is expected to expand by 3.7 percent, down from 4.7 percent.

The Euro area economy is forecast to grow 2.8 percent, down from the previous expectation of 3.9 percent. As for the economy of Germany, it is anticipated to grow by 2.1 percent, down from 3.8 percent.

Russia is expected to see its economy contract 8.5 percent this year, while it was expected to grow 2.8 percent in the forecast made in January.

Inflation

"Economic damage from the conflict will contribute to a significant slowdown in global growth in 2022," said the IMF in its report.

"A severe double-digit drop in GDP for Ukraine and a large contraction in Russia are more than likely, along with worldwide spillovers through commodity markets, trade, and financial channels," it added.

The IMF said that the war, which broke out on February 24, reduces growth and adds to inflation, as fuel and food prices increase rapidly, and especially low-income countries are affected the most.

"Elevated inflation will complicate the trade-offs central banks face between containing price pressures and safeguarding growth. Interest rates are expected to rise as central banks tighten policy, exerting pressure on emerging markets and developing economies," it said.

The IMF further forecast that inflation is expected to remain high longer than anticipated, due to the war-induced commodity price increases and broadening price pressures, according to the report.

For 2022, inflation is projected at 5.7 percent in advanced economies and 8.7 percent in emerging market and developing economies, which are 1.8 and 2.8 percentage points higher, respectively, than previous estimates made in January 2022. (AEK/SD)