Turkey's economy is expected to have grown 11% in 2021 after rebounding strongly from the coronavirus pandemic, a poll showed.
Yet, the economy is seen cooling off this year due to soaring inflation and recent volatility in the Turkish lira.
Turkey was one of the few countries to expand in 2020, thanks largely to cheap loans following a series of rate cuts by the central bank to stave off the economic impact of the pandemic.
Growth picked up the pace again in 2021 as COVID-19 restrictions were largely lifted. But a currency slide at the end of the year has disrupted growth expectations for this year.
The median estimate in a Reuters poll of 25 economists for 2021 gross domestic product (GDP) growth stood at 11%, with forecasts ranging between 6% and 11.8%.
The poll also put growth in the fourth quarter at 9%, according to the median estimate of 13 economists, in a range of 6.3% and 11.9%.
The government has also put forward estimates that the economy would record double-digit growth in 2021, higher than its previous forecast of 9%.
"Even though international institutions say 9%, we think that we will reach double-digit growth numbers at the end of the year," President Recep Tayyip Erdoğan said in November.
The European Bank for Reconstruction and Development (EBRD) said in November the economy would have grown by 9% in 2021, buoyed by a revival in exports and tourism.
The country’s exports reached a record $225.4 billion last year, with a target of $300 billion set for 2023. Tourism revenues doubled to almost $25 billion, as the sector continued to recover from the impact of measures to combat the spread of COVID-19 since 2020.
Revenues were $34.5 billion in 2019, prior to the outbreak of the pandemic. The government forecast income this year to match that of 2019.
The economic boom in 2021 was overshadowed by double-digit inflation, which soared after the Central Bank of the Republic of Turkey (CBRT) began cutting its policy rate in September.
The lira has been broadly stable since the start of the year following a 44% decline in 2021.
The authorities have been pursuing a new economic policy of low interest rates to boost credit, exports and investments, saying it would help the country weather inflation.
Erdoğan says the policy will also eventually help Turkey solve its chronic current account deficit problem and contribute to stabilizing the lira.
To support the drive, the central bank had brought down the benchmark policy rate by 500 points since September to 14% but paused the easing cycle in January and kept the one-week repo rate unchanged this month again.
The lira had hit a record low of 18.36 against the U.S. dollar in December. The currency has been hovering around 13.5 since then after the government instituted a new financial tool to push savers away from buying foreign currencies and encourage them to convert their foreign currency holdings to liras with a scheme that safeguards deposits against currency fluctuations.
The lira weakened as much as 1.5% against the dollar on Tuesday, nearing its weakest level this year, after Russia escalated tensions in eastern Ukraine.
It slid as far as 13.9025 before trimming its losses to 13.85 during the day. It traded at 13,8025 as of 1:40 p.m. local time on Wednesday.
GDP growth in 2022 is expected to be 3.5%, based on the median estimate of 23 economists in the Reuters poll. Predictions ranged from 0.8% to 5.2%.
Growth stood at 7.4% in the third quarter of 2021, and a massive 22% in the second quarter mainly due to the so-called base effect created by the pandemic-related downturn in 2020.
The Turkish Statistical Institute (TurkStat) is expected to announce the fourth quarter and 2021 GDP data on Feb. 28.