Turkey’s GDP growth to slow to 3.4% in ’24 – IMF

Turkey’s GDP growth is projected to slow to 3.4 per cent in 2024, with inflation remaining around 43 per cent by the end of December 2024, according to the IMF’s latest Article IV consultation.

The IMF noted a significant shift in Turkey’s economic policies since mid-2023, leading to a tighter policy mix that has reduced crisis risks and improved market confidence.

Key indicators of progress include a reduction in Turkey’s current account deficit to 2.7 per cent of GDP in Q1 2024 and an increase in international reserves by $91 billion since April 2023.

Additionally, sovereign risk ratings have been upgraded, and credit default swap (CDS) spreads have narrowed by nearly 440 basis points.

Looking ahead to 2025, GDP growth is expected to further moderate to 2.7 per cent, with inflation potentially falling to around 24 per cent. The IMF recommends maintaining tight monetary and fiscal policies, including a fiscal consolidation effort totalling 2.5 per cent of GDP over 2024-2025, to support disinflation and stabilise the economy.

Export growth is projected to keep the current account deficit around 2 per cent of GDP, while international reserves are expected to remain above 100 per cent of the IMF’s reserve adequacy metric.

The IMF also warns that a gradual approach to reducing inflation could leave Turkey vulnerable to external shocks, underscoring the importance of ongoing structural reforms and financial stability measures.

Attribution: IMF

Subediting: M. S. Salama