map Turkey
The May elections secured President Erdoğan another term in office. The appointment of market-friendly policy makers to the finance ministry and the central bank signals a shift towards a more orthodox monetary policy, justifying our upward revision of the policy rate to 25% by the end of 2023. Yet the lack of acknowledgement of past policy failures suggests that this policy shift could be short lived: as inflation decreases, the central bank will likely cut its policy rate in 2024. The government’s decision to supply natural gas to households free of charge resulted in a notable reduction in inflation in May. While the recent depreciation in the exchange rate may offset these gains, we have lowered our inflation forecast to 42.8% for 2023 and 33.8% for 2024. Overall, in Q1 2023 the economy grew by 4%, despite contractions in agriculture, industry and exports; this was driven primarily by fiscal stimuli ahead of the elections. The latest indicators for Q2 paint a mixed picture, with strong consumer confidence and retail sales, but signs of stagnation in industrial production and exports. We have maintained our GDP forecast, on the assumption that the fiscal stimuli and household consumption will continue to support growth.
Main Economic Indicators202020212022202320242025
Population, 1000 persons833858414784980...
GDP, real change in %1.911.
GDP per capita (EUR at PPP)183302036024360...
Gross industrial production, real change in %
Unemployment rate - LFS, in %, average13.212.010.510.09.59.0
Average gross monthly wages, EUR570556590...
Consumer prices, % p.a.12.319.672.342.833.817.1
Fiscal balance in % of GDP-2.9-2.4-1.1-4.0-3.0-3.0
Public debt in % of GDP39.641.831.7...
Current account in % of GDP-4.5-0.9-5.3-4.0-3.0-2.5
FDI inflow, EUR m67061131912735...
Gross external debt in % of GDP55.855.949.9...

Basic data are continuously updated.

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


Monthly Report No. 7-8/2023

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, Bernd Christoph Ströhm, Maryna Tverdostup, Nina Vujanović, Zuzana Zavarská and Adam Żurawski
wiiw Monthly Report No. 7-8, July-August 2023
51 pages including 3 Tables, 24 Figures and 1 Box



Executive summary

Olga Pindyuk
in: Sailing Through Rough Waters
wiiw Forecast Report No. Spring 2023, April 2023 , pp. I-VI