Turkey

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Although economic growth exceeded expectations in 2023 (with quarterly growth of 3.9% and 5.9% in Q2 and Q3), driven by both government and private consumption, there has been no noticeable improvement in the macroeconomic imbalances. Inflation closed the year at 64.8% (about the same as the year before), while the current account deficit similarly remained pretty well unchanged (also at a high level). The central focus of the central bank has been exclusively on controlling demand-side inflation, with gradual policy rate hikes serving as the principal measure. However, given its preference for a soft-landing approach in both growth and inflation, policy rates are likely to be cautiously cut again toward the end of 2024. With the March 2024 local elections looming and with post-February 2023 earthquake reconstruction efforts continuing, government spending and investment will stay high, suggesting that it will take several years to resolve the macroeconomic imbalances. Therefore, from 2024 we anticipate that inflation will decline, but will still persist at an elevated level until 2026. Economic growth is expected to moderate in 2024 (3%) due to tighter financial conditions, a slow recovery in external demand and persistent high inflation, and to remain relatively modest through 2026.
        FORECAST*
Main Economic Indicators202120222023202420252026
Population, 1000 persons841478498085326...
GDP, real change in %11.45.54.23.03.63.8
GDP per capita (EUR at PPP)1995023810....
Gross industrial production, real change in %16.56.20.9...
Unemployment rate - LFS, in %, average12.010.59.510.510.010.0
Average gross monthly wages, EUR556590....
Consumer prices, % p.a.19.672.354.054.031.029.0
Fiscal balance in % of GDP-2.4-1.1-4.0-4.0-3.5-3.0
Public debt in % of GDP41.731.7....
Current account in % of GDP-0.9-5.4-5.0-3.5-3.0-3.0
FDI inflow, EUR m1131912973....
Gross external debt in % of GDP56.049.9....


Basic data are continuously updated.

* Forecasts are changed beginning of January, April, July and November.
See Press Conferences.

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Monthly Report No. 1/2024

Vasily Astrov, Alexandra Bykova, Rumen Dobrinsky, Selena Duraković, Meryem Gökten, Richard Grieveson, Doris Hanzl-Weiss, Gabor Hunya, Branimir Jovanović, Niko Korpar, Sebastian Leitner, Isilda Mara, Olga Pindyuk, Sandor Richter, Marko Sošić, Bernd Christoph Ströhm, Maryna Tverdostup and Adam Żurawski
wiiw Monthly Report No. 1, January 2024
50 pages including 5 Tables and 18 Figures

Details

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Executive summary

Branimir Jovanović
in: Beneath the Veneer of Calm
wiiw Forecast Report No. Autumn 2023, October 2023 , pp. I-VI
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