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GDP growth is estimated to have slowed to under 3% in 2016, but is projected to pick up gradually to around 3¾ per cent by 2018. The Turkish economy continues to face geopolitical headwinds and unsettled political conditions, after having weathered a coup attempt in July and engaged in military operations in Syria.
Uncertainties are high but fiscal, prudential and monetary policies are supportive and should spur household consumption from late 2016 onwards. New and generous incentives have been introduced to stimulate business investment, which, however, has stayed subdued so far. For private investment to pick up, it is important to durably restore confidence by implementing high-priority structural and institutional reforms.
The hard-won fiscal room gained through prudent budget policy enabled the authorities to phase in several counter-cyclical measures. The Medium-Term Economic Programme 2017-2019 published in early October announced further, and welcome, infrastructure investment. A transparent and integrated framework for the planning, procurement and fiscal management of large infrastructure projects, including those undertaken through public-private partnerships, would reduce their costs and create room for other growth-friendly spending, such as on education.
Economic Survey of Turkey (survey page)