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September 25, 2021

GarantiBank: Lower economic growth, at historical minimum in 2014

In 2014, a GDP growth of 2 percent is expected, lower than the 2.4 percent registered in 2013. The GDP growth rate is expected to decelerate in the following year mainly due to a lower production in agriculture and the deceleration of industrial production growth, on the back of softening exports’ dynamics. This is the main forecast for 2014 in Garanti Bank’s latest Quarterly Macroeconomic Report.
In regards to the inflation, it is expected to reach a historical minimum of around 1 percent in the first half of 2014, but to increase in the second part of the year towards 3.5 percent. The major inflationary impact for 2014 is expected to come from the energy price liberalization (around 10 percent increase), the gas price liberalization (approx. 8 percent increase) and the announced excise duty indexation by 4.77 percent as of January 2014 and additional excise duty hike on fuels (around 5.5 percent increase in final price of fuels with 0.5 percentage points contribution to inflation).
Garanti Bank’s specialists estimate that the BNR will continue the softening of the monetary policy with two more key rate cut down to 3.5 percent, as early as the first trimester 2014. “The lower inflation will give a boost to the purchasing power, and the financing in local currency will become more attractive, respectively cheaper”, stated Rozalia Pal, Chief Economist at GarantiBank. Furthermore, the recovery of both private and public investments is expected in 2014.

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