US President Donald Trump's underperformance on his pledges has directed global funds back to emerging economies, including Turkey. Propped up by the inflow of foreign capital, the Turkish economy has begun to pull itself together, returning from the brink of the crisis that occurred in the second half of 2016 when its growth rate had dropped to 1%. The Justice and Development Party (AKP) government looks set to close the year with a growth rate of 3.5% to 4%, notwithstanding the many problems accumulated in the meantime, including the budget deficit, bad loan risks, a growing current account deficit, ossifying unemployment and double-digit inflation.

The dimming prospect of Trump following through on promised reforms such as tax cuts and infrastructure investments has brought about the prospect of slower rate hikes by the Federal Reserve, which — coupled with ongoing liquidity expansions by the European and Japanese central banks — means the return of the period of abundant and cheap money. As the flow of global funds to emerging economies intensifies, local currencies are gaining ground against the dollar and interest rates are on a downward track.

The perception of uncertainty over the US economy has weakened also hopes of growth expanding from 2% to 3%. All this is slowing down the Federal Reserve’s pace in hiking rates. Some had initially argued that 2017 would see four hikes, but the expectation dropped to three. Now, with the Trump factor, this is dropping further to two hikes.

Trump’s stumbles have already led to revisions in growth forecasts for the American economy. In the June edition of its Global Economic Prospects report, the World Bank cut its 2017 forecast by 0.1 points to 2.1%, well below Trump’s goal of 3%. According to the report, global economic growth this year will be led by the seven biggest emerging economies: Brazil, China, India, Indonesia, Mexico, Russia and Turkey. Noting that the Turkish economy was recovering fast, the World Bank raised its growth forecast for Turkey by 0.5 points to 3.5%.