The World Bank increased Turkey's gross domestic product (GDP) projection for 2020, according to its Global Economic Prospects report released Tuesday.

The international financial institution estimates that the Turkish economy grew 0.5% in 2020, up from an estimated 3.8% contraction in June, "amid a substantial expansion in credit," the report said.

Turkey is forecast to see its GDP grow 4.5% in 2021, down from previous expectations of a 5% increase.

"The outlook has been downgraded as the sharp acceleration in new COVID-19 cases, weaker than-expected international tourism, and tighter than-anticipated monetary policy weigh on the recovery," the report said.

It is estimated to see 5% growth in 2022.

"Despite hikes in the policy interest rate, the lira hit new lows against the US dollar, which eroded balance sheets and limited the space available for additional countercyclical policy responses," it said.

Fourth worst recession in 150 years

The Bank said it estimates that the global economy contracted 4.3% in 2020, making it the fourth-worst global recession in the last 150 years, due to the coronavirus and shutdown measures.

The world economy is forecast to recover in 2021 by growing 4% and expand another 3.8% in 2022.

"Given the unprecedented nature of the pandemic, prospects for the global economy are uncertain," the report said. "Nonetheless, the level of global GDP in 2021 is forecast to be 5.3% below pre-pandemic projections -- or about $4.7 trillion."

Advanced economies are expected to grow at a slower rate in 2021 and 2022, compared to emerging market and developing economies.

The institution expects advanced economies to expand 3.3% and 3.5% in 2021 and 2022, respectively, while projections are 5% and 4.2% growth for developing countries.

The US is estimated to see its GDP increase 3.5% and 3.3% in 2021 and 2022, respectively. China is forecast to rise 7.9% and 5.2%. /aa