The Turkish Economy In 2024
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The Turkish economy in 2024 is expected to grow moderately, but face high inflation and fiscal challenges. According to the Medium-Term Program released by the Turkish government, the GDP growth rate is projected to be 5 percent in 2024, while the per capita income is predicted to surpass USD 10,000 threshold in 2023. However, the inflation rate is forecasted to be around 40 percent at the end of 2024, due to the lagged effects of currency depreciation, tax hikes, and administered price adjustments¹.
The central government budget deficit is also estimated to widen to 5.9 percent of GDP in 2024, mainly due to earthquake-related expenditures, pension system reforms, and rising interest rates². The current account balance is expected to improve slightly, as external portfolio inflows keep domestic demand buoyant, to about 4.1 percent of GDP in 2024².
The Turkish economy in 2024 is also influenced by the global and regional developments, such as the COVID-19 pandemic, the geopolitical tensions, and the trade relations. The Turkish government has been pursuing various policies to enhance its economic resilience and competitiveness, such as increasing domestic production, diversifying export markets, attracting foreign direct investment, and strengthening institutional capacity³. The Turkish central bank has also undergone a major reshuffle, but maintained its commitment to tight monetary policy to curb inflation and stabilize the exchange rate⁴. Moreover, the Turkish foreign minister has met with officials from various countries, such as Montenegro, Kosovo, Iceland, Italy, and Germany, to discuss bilateral political and economic relations⁵. Additionally, a Turkish company has signed a deal with Saudi Arabia’s Investment Ministry, to pave the way for projects mutually beneficial to Türkiye and Saudi Arabia⁶.
In sum, the Turkish economy in 2024 shows some positive signs of growth and stability. It also harbours significant challenges and risks. As such, the outlook for the Turkish economy is mixed. The Turkish government and the central bank are trying to implement policies that can balance the trade-offs between inflation and growth, fiscal discipline and social welfare, and domestic and external demand. The Turkish economy in 2024 is also seeking to expand its regional and global cooperation and integration, to benefit from the opportunities and overcome the obstacles in the post-pandemic era. However, fiscal measures alone without structural reforms are unlikely to be sufficient. Especially the increasing tension between the ruling party and the opposition may adversely affect domestic balances after the local elections on 31 March 2024.
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