Turkey Economic Re-Balancing Will Be ‘Short-Lived’, Goldman Says
February 08, 2012, 10:26 AM ESTBy Benjamin Harvey
Feb. 8 (Bloomberg) -- Turkey’s current account deficit is likely to be “chronically high” because the rebalancing of the economy won’t last and authorities aren’t taking the measures required, Goldman Sachs Group Inc. said.
“The current situation is reminiscent of September 2010, when the central bank introduced a series of policy measures designed to help rebalance the economy,” Goldman economist for the region Ahmet Akarli said in an e-mailed report today. “The central bank’s main advantage at the time was that inflation was exceptionally low, which meant it could lean heavily on the exchange rate channel.”
Goldman published the report after industrial production in December climbed 2.7 percent from the previous month, consequently revising its economic growth estimate for last year to 8.4 percent from 8.1 percent. The current account deficit surged to 10 percent of estimated gross domestic product last year as Turkish companies imported more goods to use in production.
“Today’s data print reinforces our growing concern that the rebalancing will be more shallow and short-lived than the majority of market participants currently expect,” Goldman said.
Inflation climbed to 10.5 percent last month, more than double the central bank’s medium-term goal. The rate was 6.2 percent in September.
To contact the reporter on this story: Benjamin Harvey in Istanbul at bharvey11@bloomberg.net
To contact the editor responsible for this story: Mark Bentley at mbentley3@bloomberg.net
