* GDP growth seen slowing to 2.3 percent this year
* Sharp private consumption slowdown seen hitting growth
* Erdogan seeking rate cut to help economy
ISTANBUL, April 8 Turkish economic growth will
slow more than previously expected this year because of higher
borrowing costs, a weaker lira and a sharp fall in private
consumption, the International Monetary Fund said on Tuesday.
In its latest World Economic Outlook report, the IMF
forecast real gross domestic product growth of 2.3 percent this
year, rising to 3.1 percent in 2015. In its previous report last
October it had predicted 2014 growth of 3.5 percent.
"Growth in Turkey is expected to weaken in 2014 ... mainly
as a result of a sharp slowdown in private consumption driven by
macroprudential measures, the sizeable exchange rate adjustment
and interest rate hikes," the report said.
"The region as a whole will see slightly weaker growth in
2014 than it did in 2013, mainly on account of Turkey, whose
economy is much more cyclically advanced than those of other
countries in the region," it said.
Turkey's economy grew 4 percent last year, official Turkish
data showed at the end of last month. The government has an
official forecast of 4 percent growth for this year.
Turkey's central bank raised interest rates sharply at the
end of January as it battled to defend the lira after it tumbled
to record lows.
The lira has since recovered and Prime Minister Tayyip
Erdogan called last week for a rate cut, saying his AK Party's
strong showing in recent local elections had boosted markets and
lower rates would encourage investors.
Central bank governor Erdem Basci hinted on Monday at
possible interest rate cuts for the first time in a year, but
added that they would be gradual and that the bank alone would
decide on their timing.
INFLATION SEEN PICKING UP
The IMF also raised its forecast for consumer price
inflation to 7.8 percent this year, up from a prediction of 5.3
percent in its October report. Inflation was expected to ease to
6.5 percent in 2015.
The report said growth was led by private consumption in
Turkey, unlike elsewhere in emerging Europe during the 2013
economic recovery where it continued to be driven by external
"The rise in private consumption reflected mostly
pro-cyclical macroeconomic policies in Turkey," it said.
"After an initial improvement, financial market volatility
has increased since early fall in most countries. As a result,
the region, excluding Turkey, experienced capital outflows," it
The current account deficit, generally a weak point in the
Turkish economy, was seen falling to 6.3 percent of GDP this
year from 7.9 percent last year and was expected to decline
further to 6.0 percent in 2015.
(Writing by Daren Butler; Editing by Gareth Jones)