EBRD raises growth forecast for Türkiye

The EBRD has raised its 2023 growth forecast for Turkey to 3.5 percent. It expects the Turkish economy to grow by 3 percent in 2024. The European Bank for Reconstruction and Development (EBRD) has revised its GDP growth forecast for Turkey, which it announced as 2.5 percent in May, to 3.5 percent for 2023. Although growth is expected to slow in the second half of the year, it has made an upward revision for 2023. The bank expects strong growth in the first half of the year due to the fiscal recovery before the election. The EBRD has kept its 2024 growth forecast at 3 percent. Operating in a wide geography consisting of developing European countries, Central Asia and North Africa, the EBRD, in addition to the forecasts for Turkey included in the Regional Economic Outlook report published today, predicted that growth in the regions where the EBRD operates will slow to an average of 2.4 percent in 2023. The report emphasized that despite the expected growth performance, external financing imbalances in the Turkish economy continue due to short-term external debt exceeding $200 billion and the current account deficit remaining at $60 billion. It also underlined that foreign exchange reserves are increasing but remain modest. According to the report, while the return to orthodox economic policies is seen as a positive signal, it was stated that the local elections in March 2024 will be an important factor. EBRD economists stated that Turkey has displayed a relatively strong growth performance in recent years, but that a slowdown is observed. The report stated that Turkish GDP growth slowed from 5.6 percent to 3.9 percent in the first half of 2023 compared to the same period in 2022, and added that despite the decline in inflation, the high trend continues and inflation is expected to rise to 60 percent by the end of 2023.