EBRD upgrades growth forecast for Türkiye

LONDON

The European Bank for Reconstruction and Development (EBRD) has revised its Türkiye GDP growth forecast to 3.5 percent for 2023 from a forecast in May of 2.5 percent.

The upward revision for 2023 reflects strong growth in the first half of the year, driven by pre-election fiscal stimulus, although growth is expected to slow in the second half of the year, the bank said in a statement on Sept. 27.

The bank expects Türkiye’s economy to grow by 3 percent in 2024, unchanged from the May estimate.

The forecasts were published in the bank’s Regional Economic Prospects report, which includes an expected slowdown in growth in the EBRD regions to an average of 2.4 percent in 2023.

The report also highlighted remaining external imbalances in Türkiye’s economy, with short-term external debt exceeding $200 billion and the current account deficit standing at $60 billion.

“Foreign exchange reserves are increasing, but remain modest,” it said.

According to the report, a return to orthodox economic policies is a positive signal and the local elections in March 2024 will be a significant factor as they draw closer.

In the first half of 2023, GDP growth decelerated from 5.6 per cent in 2022 to 3.9 percent year on year, the report said, noting that inflation declined but remains elevated and is expected to rise to 60 percent by the end of 2023.

To date, the EBRD has invested more than 18 billion euros in various sectors of the Turkish economy, largely in the private sector.