WIIW The Vienna Institute for International Economic Studies - Wiener Institut für Internationale Wirtschaftsvergleiche

In the first half of 2023, Turkey faced a challenge of unbalanced economic growth, fuelled primarily by strong household consumption. While this uptick provided a boost to the economy, it also created a delicate balancing act for the Turkish authorities. If they maintain their dedication to monetary stability, the opportunity exists to gradually rein in inflation over the coming years; however, that would come at the cost of economic slowdown. That said, the possibility of policy reversals in the future, once external financing becomes more stable or the budget deficit levels out, brings an element of uncertainty.