Turkish economy grew 4.5 percent last year

ANKARA

The Turkish economy grew by 4.5 percent last year after expanding 5.5 percent in 2022, the data from the Turkish Statistical Institute (TÜİK) have shown, slightly exceeding the government’s forecast.

In the medium-term program, the government had predicted a growth rate of 4.4 percent for 2023.

Indicators show that the balancing of the economy and the improvement in the current account deficit continue, Finance Minister Mehmet Şimşek said in a written statement, commenting on the latest growth data.

“We expect a moderate and balanced growth in 2024, with net foreign demand making a positive contribution to the economic growth,” he added.

The minister stressed that domestic demand’s contribution to growth declined to 6.6 points in the second half of 2023 from 8.8 percent in the first half.

“The improved composition of growth due to the policies will implement will make a great contribution to the disinflation process,” Şimşek said.

At current prices, the size of the Turkish economy reached $1.12 trillion, rising from $906 billion in 2022.

The per capita income in Türkiye was $13,110, TÜİK said on Feb. 29.

In the final quarter, the annual growth was 4.1 percent, easing from a revised 6.1 percent growth in the third quarter of 2023. On a seasonally and calendar-adjusted basis, the country’s GDP expanded by 1 percent in the fourth quarter of last year, accelerating from the 0.3 percent increase in the third quarter.

Consumer spending was one of the main drivers of economic growth in 2023 and the fourth quarter of last year.

The final consumption expenditure of households, which accounted for 59.1 percent of the GDP, rose 12.8 percent in the whole of 2023. In the final quarter of last year, those expenditures increased 9.3 percent from a year ago, slowing from the 11.1 percent year-on-year rise in the third quarter.

Government expenditure was up 5.2 percent last year, after rising 4.2 percent in 2022, while gross capital formation increased by 8.9 percent, accelerating significantly compared to the 1.3 percent increase two years ago.

Exports declined by 2.7 percent in 2023 but increased by 0.2 percent in the final quarter.

Imports rose 11.7 percent last year. The annual increase in imports slowed to 2.7 percent in the fourth quarter from 14.5 percent in the previous three-month period.

Industry expanded 0.8 percent in the whole of 2023 with the sector’s growth rate slowed from 5.5 percent in the third quarter to 1.9 percent in the October-December.

The manufacturing sector grew 1.6 percent last year, comparing unfavorably with the 4.3 percent expansion in 2022.

The annual growth of the large construction sector was 7.8 percent, with the industry’s expansion accelerating from 7.8 percent in the third quarter to 10.8 percent in the final quarter of 2023. Real estate activities grew 2.7 percent last year, according to the numbers from TÜİK.

The services sector expanded 6.4 percent last year after growing 12.7 percent in 2022.

The government expects the economic growth to slow to 4 percent in 2024. Its GDP growth forecasts for next year and 2026 are 4.5 percent and 5 percent, respectively.