BNP Paribas | Turkish economy: A double edged sword

“Turkey’s economic situation continues to offer a stark contrast, with resilient growth on one hand and soaring inflation, dwindling foreign exchange reserves and a depreciating lira on the other. In short, the reed bends but does not break,” economists at BNP Paribas note.

“In a previous edition, at the beginning of the year, we mentioned the peculiar economic situation in Turkey. It is still the case. Growth still resists. It was plus 1.2% in the first quarter compared to the previous quarter.”

“At the same time, inflation has continued to accelerate, 5.1% per month on average between February and June, to reach a peak of 78.6% YoY.”

“Other estimates even mention a triple digit inflation rate. “

“In parallel, foreign reserves have decreased by approximately 28 billion dollars since late November due to the rising energy bills and portfolio investments outflows.

“The lira has depreciated by approximately 20% against a euro-dollar basket.”