Skyline at golden hour in Turkey

Turkey Economic Forecast

Turkey Economic Outlook

On 6 February, two earthquakes of magnitudes 7.8 and 7.5 struck the southeast of the country, followed by numerous aftershocks. The cataclysm killed nearly 50.000 people and severely damaged more than 100,000 buildings. It has also hampered the economy, with many firms hit by supply disruptions and labor shortages. Moreover, reconstruction efforts will widen the fiscal deficit, while the current account is likely to worsen as exports decline and the country requires more imported goods and increased capital inflows for rebuilding. That said, the catastrophe’s impact on medium and long-term growth is likely to be limited. Despite the tragedy, President Erdogan has indicated that presidential and parliamentary elections will be held on 14 May. In other news, national accounts data revealed that annual economic growth slowed in Q4 2022, dented by the external sector’s weaker performance.

Turkey Inflation

Inflation declined for the fourth successive month in February, coming in at 55.2% (January: 57.7%). The downtick was driven by a broad-based moderation in price increases due to a high base, which should continue to drive down inflation in the coming months. However, inflation will likely remain markedly above the Central Bank’s 5.0% target for the rest of the year.

Turkey Economic Data

2017 2018 2019 2020 2021
Population (million) 80.8 82.0 83.2 83.6 84.7
GDP (USD bn) 859 776 759 719 813
GDP per capita (USD) 10 9 9 8 9
GDP (EUR bn) 762 658 678 630 688
GDP per capita (EUR) 9 8 8 7 8
GDP (TRY bn) 3 3 4 5 7
Economic Growth (Nominal GDP, ann. var. %) 19.3 19.9 14.7 17.1 43.6
Economic Growth (GDP, ann. var. %) 7.5 3.0 0.8 1.9 11.4
Domestic Demand (ann. var. %) 7.2 -0.7 -1.5 7.5 6.5
Private Consumption (ann. var. %) 5.9 0.5 1.5 3.2 15.3
Government Consumption (ann. var. %) 5.0 6.5 3.8 2.5 2.6
Fixed Investment (ann. var. %) 8.3 -0.2 -12.5 7.4 7.4
Exports (G&S, ann. var. %) 12.4 8.8 4.2 -14.4 24.9
Imports (G&S, ann. var. %) 10.6 -6.2 -5.0 6.7 2.4
Industrial Production (ann. var. %) 9.1 1.1 -0.6 2.2 16.5
Retail Sales (annual variation in %) 5.7 1.5 -0.1 3.4 15.5
Unemployment (s.a. % of active population) 10.3 13.3 13.6 13.0 11.3
Unemployment (% of active population, aop) 10.9 10.9 13.7 13.1 12.0
Fiscal Balance (% of GDP) -1.5 -1.9 -2.9 -3.5 -2.7
Public Debt (% of GDP) 27.9 30.1 32.6 39.7 42.0
Money (ann. var. of M2 %) 15.5 20.2 25.6 35.6 52.2
Inflation (CPI, ann. var. %, eop) 11.9 20.3 11.8 14.6 36.1
Inflation (CPI, ann. var. %, aop) 11.1 16.3 15.2 12.3 19.6
Inflation (Core, ann. var. %, eop) 12.3 19.5 9.8 14.3 31.9
Inflation (PPI, ann. var. %, eop) 15.5 33.6 7.4 25.2 79.9
1-Week Repo Rate (%, eop) 8.00 24.00 12.00 17.00 14.00
10-Year Bond Yield (%, eop) 11.44 15.83 12.00 12.51 23.05
Stock Market (ann. var. of BIST %) 47.6 -20.9 25.4 29.1 25.8
Exchange Rate (TRY per USD, eop) 3.79 5.32 5.95 7.43 13.28
Exchange Rate (TRY per USD, aop) 3.65 4.84 5.68 7.02 8.92
Exchange Rate (TRY per EUR, eop) 4.55 6.08 6.68 9.09 15.10
Exchange Rate (TRY per EUR, aop) 4.11 5.72 6.36 8.01 10.54
Current Account Balance (USD bn) -40.0 -20.2 10.8 -31.9 -7.2
Current Account Balance (% of GDP) -4.6 -2.6 1.4 -4.4 -0.9
Merchandise Trade Balance (USD bn) -58.6 -40.7 -16.8 -37.9 -29.3
Merchandise Exports (USD bn) 169.2 178.9 182.2 168.4 224.7
Merchandise Imports (USD bn) 227.8 219.6 199.0 206.3 254.0
Merchandise Exports (ann. var. %) 10.9 5.7 1.8 -7.6 33.4
Merchandise Imports (ann. var. %) 18.3 -3.6 -9.4 3.7 23.1
Foreign Direct Investment (USD bn) 11.1 12.6 9.6 7.8 12.5
International Reserves (USD bn) 84 73 79 50 73
International Reserves (months of imports) 4.4 4.0 4.7 2.9 3.4
External Debt (USD bn) 450.8 426.5 415.4 432.5 442.5
External Debt (% of GDP) 52.5 55.0 54.8 60.2 54.4

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