First quarter GDP growth in Turkey was stronger than expected, driven by an impressive turnaround in domestic demand. But the flipside of domestic demand-led growth is that the current account deficit is widening again, a trend that has continued at the start of Q2. As a result, Turkey’s external vulnerabilities are starting to resurface. This is a particular concern in the context of the recent protests, which have the potential to dent investor confidence and make it more difficult to attract foreign capital.
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