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Turkey Economic Forecast

Turkey Economic Outlook

Annual economic growth eased in Q2, dented by weaker private and public spending growth and a sharper decline in exports. On the flip side, investment picked up thanks to sturdier construction activity following Q1’s earthquakes. Shifting to the current quarter, available data suggests that momentum is cooling further. The manufacturing PMI was entrenched in contractionary terrain in July and August. Moreover, inflation turned upward in July after falling for eight consecutive months, which deepened pessimism among consumers in July–August. Meanwhile, a sharp interest rate hike in August is likely weighing on activity. In other news, in late August, the country deepened its ties with several Middle Eastern countries: It signed an agreement on mining with Saudi Arabia and obtained additional investment in logistics and infrastructure from the UAE.

Turkey Inflation

In July, inflation rose for the first time since October 2022, coming in at 47.8% (June: 38.2%). The increase was driven by stronger price pressures for food and transportation. Inflation is set to pick up in the coming quarters due to lira weakness, increased pensions and a higher minimum wage. That said, aggressive interest rate hikes will limit the surge in prices.

This chart displays Economic Growth (GDP, annual variation in %) for Turkey from 2013 to 2022.

Turkey Economic Data

2018 2019 2020 2021 2022
Population (million) 82.0 83.2 83.6 84.7 85.3
GDP (USD bn) 776 760 719 814 905
GDP per capita (USD) 9,468 9,137 8,595 9,609 10,607
GDP (EUR bn) 658 679 630 688 861
GDP per capita (EUR) 8,024 8,163 7,539 8,129 10,092
GDP (TRY bn) 3,761 4,318 5,049 7,256 15,012
Economic Growth (Nominal GDP, ann. var. %) 20.0 14.8 16.9 43.7 106.9
Economic Growth (GDP, ann. var. %) 3.0 0.8 1.9 11.4 5.5
Domestic Demand (ann. var. %) -0.6 -1.6 7.4 6.4 5.1
Private Consumption (ann. var. %) 0.6 1.5 3.2 15.4 19.0
Government Consumption (ann. var. %) 5.9 3.9 2.2 3.0 4.2
Fixed Investment (ann. var. %) 0.1 -12.5 7.3 7.2 1.3
Exports (G&S, ann. var. %) 9.1 5.3 -14.6 25.1 9.9
Imports (G&S, ann. var. %) -6.2 -5.0 6.8 1.7 8.6
Industrial Production (ann. var. %) 1.6 -0.8 1.7 17.8 5.7
Retail Sales (annual variation in %) 1.9 -0.5 3.3 15.6 10.2
Unemployment (s.a. % of active population) 13.3 13.6 13.0 11.3 10.4
Unemployment (% of active population, aop) 10.9 13.7 13.1 12.0 10.5
Fiscal Balance (% of GDP) -1.9 -2.9 -3.4 -2.8 -0.9
Public Debt (% of GDP) 30.1 32.6 39.7 41.8 31.7
Money (ann. var. of M2 %) 20.2 25.6 35.6 52.2 62.3
Inflation (CPI, ann. var. %, eop) 20.3 11.8 14.6 36.1 64.3
Inflation (CPI, ann. var. %, aop) 16.3 15.2 12.3 19.6 72.3
Inflation (Core, ann. var. %, eop) 19.5 9.8 14.3 31.9 51.9
Inflation (PPI, ann. var. %, eop) 33.6 7.4 25.1 79.9 97.7
1-Week Repo Rate (%, eop) 24.00 12.00 17.00 14.00 9.00
10-Year Bond Yield (%, eop) 15.83 12.00 12.51 23.05 9.87
Stock Market (ann. var. of BIST %) -20.9 25.4 29.1 25.8 196.6
Exchange Rate (TRY per USD, eop) 5.32 5.95 7.43 13.28 18.72
Exchange Rate (TRY per USD, aop) 4.84 5.68 7.02 8.92 16.59
Exchange Rate (TRY per EUR, eop) 6.08 6.68 9.09 15.10 19.98
Exchange Rate (TRY per EUR, aop) 5.72 6.36 8.01 10.54 17.44
Current Account Balance (USD bn) -20.2 10.8 -31.9 -7.2 -48.4
Current Account Balance (% of GDP) -2.6 1.4 -4.4 -0.9 -5.4
Merchandise Trade Balance (USD bn) -40.7 -16.8 -37.9 -29.3 -89.5
Merchandise Exports (USD bn) 179 182 168 225 253
Merchandise Imports (USD bn) 220 199 206 254 343
Merchandise Exports (ann. var. %) 5.7 1.8 -7.6 33.4 12.8
Merchandise Imports (ann. var. %) -3.6 -9.4 3.7 23.1 35.0
Foreign Direct Investment (USD bn) 12.5 9.5 7.7 11.8 12.9
International Reserves (USD bn) 72.9 78.6 50.0 72.7 82.9
International Reserves (months of imports) 4.0 4.7 2.9 3.4 2.9
External Debt (USD bn) 426 414 429 437 459
External Debt (% of GDP) 54.8 54.5 59.7 53.7 50.7

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