WASHINGTON – The Turkish economy will expand in 2002 but not as strongly as previously estimated due to the fallout from the Sept. 11 attacks on the United States, said a report by the International Monetary Fund yesterday. In its latest report on the health of economies around the world, the fund also increased its forecast for Turkish inflation in 2002. The IMF cut its forecast for 2002 Turkish growth to 4.1 percent, down from the 5.9 percent it estimated in its last official report in September. The IMF also said the Turkish economy is contracting 6.1-percent in 2001, far worse than the 4.3-percent decline estimated in September. Economic prospects for Turkey – which had appeared to be improving from early August – have also been set back by the events of September 11 and their aftermath, the IMF said in its World Economic Outlook report. While increases in interest rates and declines in prices immediately following the attacks have subsequently reversed, Turkey remains vulnerable to further downturns in investor sentiment given its high domestic and external financing requirements, the fund said. The IMF also noted that Turkey’s efforts to reduce inflation have been hampered by a further depreciation of Turkey’s lira currency. The IMF forecast Turkish consumer prices will rise 46.4 percent in 2002, up sharply from the 32.7 percent gain estimated in September. In 2001, inflation at the consumer level is rising 53.9 percent in Turkey, the IMF said. Earlier this year, an ongoing economic crisis forced Turkey to float the lira, cutting its value in half. Ankara had hoped to turn that devaluation to its advantage since it made its exports cheaper and tourism there more attractive. But Turkey’s hopes of exporting its way to recovery were dashed when the global economic outlook deteriorated and expectations of strong tourism revenues sank after Sept. 11. The IMF has provided Turkey with billions of dollars’ worth of loans over the past year to help the country emerge from its deepest recession since 1945. Turkey needs the money to help pay down domestic debt swollen by an expensive bailout of a crisis-wracked banking system earlier this year. The IMF, in its latest report, welcomed reforms in Turkey that are designed to ensure fiscal targets are met. This program will build on the progress already made in macroeconomic and financial stabilization, and be accompanied by decisive steps to complete banking sector reform, revitalize privatization and private sector development, and improve public sector governance and efficiency, the IMF said.