Turkey sees inflation easing to 9.8% by end of 2022

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ISTANBUL — Turkey expects its annual inflation rate to fall to 9.8% at the end of 2022, from 16.2% at the end of this year, according to the government’s medium-term forecasts published on Sunday.

Economic growth is seen at 9% this year before dropping to 5% next year, according to the government’s so-called medium-term program, in which it sets out its outlook for the economy.

The forecasts, published in Turkey’s Official Gazette, foresee annual inflation falling further to 8.0% in 2023 and 7.6% in 2024. GDP growth is seen at 5.5% in both 2023 and 2024.

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Annual inflation stood at 19.25% in August and is expected to fall to 16.2% by the end of this year with the base effect, a decline in the accumulated impact of exchange rate developments, and a correction in food prices, the program said.

“Although there is an expectation of a slowdown in domestic demand in the remainder of the year… the economy is expected to grow 9% with a balanced domestic and foreign demand composition,” the program said.

It said growth would reflect the positive impact of Turkey’s coronavirus vaccine rollout, the tourism sector’s contribution to the economy and a positive outlook for economic activity helped by foreign demand.

Turkey’s economy grew 21.7% year-on-year in the second quarter, official data showed last week, rebounding after a sharp slowdown a year earlier driven by COVID-19 restrictions. (Reporting by Daren Butler and Ezgi Erkoyun Editing by Andrew Cawthorne and Susan Fenton)