The Turkish economy grew 3.0% years-to-year in the fourth quarter of 2024, bringing a full year growth to 3.2%, official data shows on Friday, exceeding estimates despite the weight of high interest rates.
The government, which initially projects 3.5% growth for 2024, has cut off its hopes to reflect ongoing adjustments in domestic demand and efforts to slow annual inflation, which exceeds 75% in May and now only more than 40%.
Minister of Finance Mehmet Simsek said balanced growth was achieved in 2024 with a contribution of 2.1 points from domestic requests and 1.1 points from net foreign demand.
“Financial conditions are more profitable in accordance with disinflation, increasing predictability with our policies and increasing trust will positively influence economic activities,” he said in a comment about economic prospects.
Increasing growth among Turkish trading partners, global financial conditions that are more supportive and expectations of moderate commodity prices will positively influence growth in 2025, but increase protectionist policies in global trade and geopolitical development is one of the risk factors, he said.
The fourth quarter gross domestic product rose 1.7% from the previous quarter on a seasonal base and adjusted to the calendar, the Turkish Statistical Institute (Tuik) data showed.
The economy experienced a technical recession last year after a decline in growth in the second and third quarters.
In the Reuters poll, the economy is estimated to have expanded 2.6% of the years-to-year in the fourth quarter and 3% in 2024 as a whole.
Analysts say in the poll that growth remains stable quite a lot due to strong demand in several regions and some production trends, despite strict monetary policy.
Economists estimate the growth of 3.1% in 2025, significantly lower than 5.1% recorded in 2023, the poll shows, reflecting the effects of a series of sharp interest rates that began in mid -20123.
The central bank raised its benchmark rate by 4,150 basis points to cool inflation, bringing tariffs to 50% in March 2024. Shifts to Orthodox policies, after years of low prices aimed at encouraging growth, burdening domestic requests.
After cutting 250 basis points in December and January, the tariff is now 45%, and is expected to drop to 30% at the end of the year.
Source: Reuters
