Turkey’s Economic Growth Outlook

ISTANBUL (Reuters) – Turkey’s economic growth is anticipated to have declined to 3.2% in the second quarter of this year, influenced by tighter economic policies, according to a Reuters poll from Thursday. For the year as a whole, growth is forecasted to cool to 3.35%.

In the first quarter, the economy expanded by 5.7%, supported by strong domestic demand, fueled by a minimum wage increase and households making purchases in anticipation of inflation.

The median estimate for second quarter GDP growth, based on a poll of 11 economists, stands at 3.2%, with estimates ranging from 1.6% to 4.2%.

In 2023, the economy registered an annual growth of 4.5% and 3.9% in the second quarter, even amid slowdowns in major trading partners and the effects of severe earthquakes in February.

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

For 2024, GDP growth is also expected to be 3.35%, with predictions varying from 3% to 3.5% based on the Reuters poll.

Following its rate-setting meeting, the central bank noted that data indicates a cooling of both annual and quarterly GDP growth rates in the second quarter compared to the previous quarter.

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

The government is committed to reducing inflation, altering the economic growth composition, and achieving sustainable growth levels. New economic forecasts are expected to be announced next week.

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