Macroeconomic Forecast Turkey

Gross external debt in Turkey rose for the first time in a year in Q209, rising 1.2% q-o-q to hit US$268.56bn at the end of the quarter. The increase was almost entirely attributed to the public sector, with consolidated government external debt rising 2.8% q-o-q to US$78.16bn. Over the same period, private sector debt remained largely flat at US$176.96bn. As a result of the latest figures, we have revised up our end-2009 total gross external debt forecast for Turkey to US$267.07bn (up from US$245.75bn). We still anticipate broad-based deleveraging in the private sector to reduce the overall debt load, though this will be mostly offset by concurrent rises in the public sector borrowing. We hold to our forecast for Turkey to post general government budget deficits of 6.9% and 5.2% of GDP in 2009 and 2010, respectively.

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