Turkey’s Economic Growth Forecast

ISTANBUL (Reuters) – Turkey’s economic growth is expected to have fallen to 3.2% in the second quarter of this year due to tighter economic policies, according to a Reuters poll released on Thursday. The GDP growth rate is anticipated to cool to 3.35% for the year overall.

In the first quarter of this year, the economy grew by 5.7%, driven by strong domestic demand, which was bolstered by a minimum wage hike and households making purchases ahead of expected inflation increases.

The Reuters poll, which included 11 economists, yielded a median estimate of 3.2% GDP growth for the second quarter, with forecasts varying from 1.6% to 4.2%.

In 2023, the economy grew an annualized 4.5%, despite external challenges such as a slowdown in main trading partners and devastating earthquakes in February.

Economists predict that current tight monetary and fiscal policies will continue to dampen domestic demand through the end of the year.

For 2024, the GDP growth is projected to be 3.35%, according to the median estimate in the Reuters poll, with predictions ranging from 3% to 3.5%.

Minutes from the central bank’s recent rate-setting meeting indicated expectations of slower GDP growth rates in the second quarter compared to the previous quarter.

Since June of last year, the central bank has increased its policy rate by 4,150 basis points and has maintained a 50% rate since March to combat inflation risks.

The government aims to reduce inflation, restructure the economic growth composition, and achieve sustainable levels of growth. New economic forecasts are expected to be announced next week.

The Turkish Statistical Institute will release Q2 growth data at 0700 GMT on Sept 2.