The bank said it had reviewed the forecast "because recovery in Q4 was weaker than envisaged" but added that net exports would help the country's growth rate recover somewhat in 2017.
"Turkey faces headwinds that will prevent strong recovery, with estimated 2017 growth of 2.7 percent driven by net exports and public spending," the report said. Turkey's exports increased by 15 percent in January, the highest rise in the last 49 months, data from the Exporters’ Assembly of Turkey (TIM) revealed on Wednesday. The World Bank said Turkey's economic expansion would recover in 2019 to 3.7 percent.
The Turkish government's most recent growth forecast for 2016 was 3.2 percent, as stated in its medium-term economic program released last October. The bank said the country's current account deficit had widened in the final quarter of 2016 due to a worsening service balance. "The service balance accounted for $1.2 billion of the increase, driven by substantially lower tourist arrivals. [...] Going forward, rising energy prices may impose the most significant upside pressure on the current account balance," the report said.
The bank also forecast that Turkey's inflation rate would stand at 8 percent at the end of 2017, and 7.5 percent in 2018. The bank noted that Donald Trump's election victory in the U.S. and anticipation that the Federal Reserve would increase interest rates at a quicker pace than previously estimated decreased global risk appetite, triggering outflows from developing countries.