Following the sacking of the Turkish Central Bank Chief and a steep fall in the Turkish Lira;

Moustafa Ali, Economist at GlobalData, a leading data and analytics company, offers his view:

“While the Central Bank chief’s orthodox monetary policy framework had won back the confidence of the markets, overseeing a sustained recovery in the lira, the outlook for the Turkish economy and construction industry appears to have worsened significantly following the sacking of the outgoing governor. GlobalData expected the industry to grow by 3.8% in 2021, but these latest developments have negatively affected the previous outlook in 2021, with a downgrade of the forecast likely if the situation deteriorates further.

“With Turkey’s policy credibility likely to worsen in the coming weeks, with the expected cut in the key interest rate, the country is expected to see major outflows of capital in the coming weeks and months. This is likely to spill over into the construction industry, with projects now set to become less profitable and financial conditions likely to tighten.

“The strengthening of the lira was expected to provide a substantial boost for the Turkish economy and construction industry in 2021. While the Turkish economy was among one of the few major economies that grew in 2020, the construction industry recorded a contraction of 3.5% in 2020. The plunge in the lira is expected to significantly hamper growth in the industry this year, with the cost of raw materials and other imported goods set to rise markedly.”