News / Business

IMF says politics hurting Turkish economy

Friday, 04 November 2016 6:00 PM [ Last Update: Friday, 04 November 2016 7:29 PM ]

The IMF says President Tayyip Erdogan’s handling of Turkey’s domestic politics is hurting the country’s economy.

The International Monetary Fund (IMF) has warned that Turkey’s growth will fall to as low as 2.9 percent this year in what it says is a result of the current political uncertainty in the country, a drop in tourism as well as high levels of corporate debt among other factors.

The IMF said Turkey still needed to maintain its current monetary stance without further easing.

"The Turkish economy has withstood several shocks," the global lender said in a statement. "However, increased political uncertainty, a sharp fall in tourism revenues, and a high level of corporate debt are all taking a toll."

Weak business confidence and negative domestic and external shocks are expected to put increased pressure on the Turkish growth, the IMF said.

The Fund also described unemployment as "high and rising" and said uncertainty had increased following the failed coup, Reuters reported.

More than 110,000 civil servants, academics, judges, police and others have been suspended or dismissed following the failed coup in July.

Tourism is a major source of foreign currency for Turkey but security concerns have hit the country’s revenues from this crucial industry.

The central bank last month kept interest rates on hold, citing weakness in the lira currency.

This came after seven straight months of cuts and repeated calls by President Recep Tayyip Erdogan for cheaper credit.

The IMF called on Ankara to prevent any further easing. "The current monetary stance balances the need to contain inflation against the backdrop of a slowing economy, and should be maintained," it said.

It also said a moderate fiscal loosening was appropriate, noting that should be accompanied by a credible medium-term consolidation plan, Reuters added.

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