What are the expectations for the Turkish economy in 2024?

Overview of the Turkish Economy's Performance in 2023

The Turkish economy is known for its dynamism and activity, thanks to its components that support its steady steps toward growth, and the figures issued by the Turkish Statistical Institute and relevant institutions continue to indicate accelerating economic growth.

On an annual basis, the Turkish Statistical Institute reviewed last year's growth figures and announced that the Turkish economy achieved a growth rate of 4.5% in 2023, and 4% in the period from October to December 2023 compared to the same quarter of the previous year. Thus, the Turkish economy has grown for 14 consecutive annual quarters with similar growth rates.

In terms of production, the gross domestic product at current exchange rates increased by 75% compared to the previous year in 2023, reaching 26 trillion 276 billion 307 million lira.

The per capita GDP in 2023 was calculated at 307,952 lira, after dividing the total GDP by the population.

The published details contain many promising figures indicating increasing growth, despite the challenges facing the Turkish lira.

With the continued momentum of the Turkish economy, Turkey became the second country among the OECD member states and the third among the G20 countries to announce its annual economic growth data for the last quarter of 2023.

In the last quarter of last year, Turkey was ranked as the second fastest-growing economy among the OECD member states.

Among the G20 countries, China was the fastest-growing country with 5.2%, followed by Indonesia with 5%, while Turkey ranked third on the list.

Turkish Vice President Cevdet Yilmaz pointed to this growth in his post on the X platform, saying: "The GDP exceeded one trillion dollars for the first time, reaching 1 trillion 119 billion dollars, while per capita GDP rose to 13,110 dollars. In an environment where predictability and confidence in our economy are ensured with political stability, we have continued to maintain our growth... The growth achieved during a period of geopolitical developments, earthquake recovery, and declining global trade activities indicates the strength of our economy."

What are the expectations for the Turkish economy in 2024?

Indicators suggest that if the quarterly growth expectations for EU countries are achieved, Turkey will become the fastest-growing economy among these countries. The year 2024 is expected to be a promising year for the Turkish economy.

After all sectors of the economy (agriculture, industry, services, etc.) recorded positive growth in 2023, these same sectors are expected to achieve more success in the coming year.

According to the Minister of Treasury and Finance, Mehmet Simsek, a growth rate of 4.5% was achieved in 2023, which is higher than the medium-term program, and per capita national income increased by $2,450 compared to the previous year. Nearly one-third of the growth in 2023 came from investment in machinery and equipment, which increased Turkey's production capacity. He said: "We are moving toward more qualified growth through investment and exports, which we strongly support."

He added in one of his statements: "In 2024, net foreign demand will contribute positively to growth... and we expect moderate and balanced growth. The improved growth composition with the policies we implement will greatly contribute to the process of slowing inflation in Turkey, in addition to ensuring price stability with a permanent increase in welfare, and we will continue structural reforms focused on high value-added production and increasing productivity."

Despite the difficulties faced by the global economy, the effects of the earthquake disaster, and the process of combating inflation, the 4.5% economic growth in 2023 is an indicator of maintaining the strong and stable structure of Turkey's economy.

Gross Domestic Product

Economists expect positive growth in 2024 with continued political stability, especially considering the economic conditions worldwide, as last year's growth figures were much higher than the global average of 3%.

In this regard, the President of the Ankara Chamber of Industry (ASO) said in a statement: "The support that will be provided to the industrial sector will increase the potential GDP growth rate, depending on increased productivity in the medium and long term, and will support the overall productivity and employment in the economy."

Unemployment

According to the forecasts of the Turkish Ministry of Labor and Social Security, the unemployment rate in Turkey will fall below 8.8% in 2024, down from current levels, and the Turkish government is preparing new programs and initiatives to create jobs and reduce unemployment.

Read also: Learn about the new economic program in Turkey.

Inflation

If the current steady steps in economic policies continue, the government's outlook for reducing inflation and its effects is generally optimistic, especially after 8 consecutive interest rate hikes. According to the Central Bank of Turkey, inflation is expected to fall to 33% by the end of 2024.

According to a previous statement by the recently resigned Governor of the Central Bank of Turkey, Hafize Gaye Erkan, during a press conference in Ankara to announce the bank's quarterly inflation report last November, she indicated the expectation of a decline in the inflation rate in Turkey in the second half of 2024, and that tight monetary policy would continue until improvement in inflation is achieved.

This was also confirmed by the Minister of Treasury and Finance, Mehmet Simsek, in a post on the "X" platform, noting that 2024 will see enhanced high and sustainable growth.

Average Wages

The Turkish government announced earlier at the beginning of 2014 an increase in the minimum monthly wages for workers, with a 49% increase, amounting to 17,002 Turkish lira (equivalent to 521 euros at that time).

Currency Rate

The Central Bank of Turkey expects the Turkish lira to be traded at around 40 lira per US dollar by the end of 2024.

Foreign Investments

Turkey is placing great hopes on strengthening its foreign relations and attracting investments from abroad by announcing various facilities for foreign investments, which is in fact one of the most important sources of its economy.

The head of the Investment Office at the Turkish Presidency, Burak Daglioglu, said that the positive indicators regarding the increase in the flow of foreign direct investments to Turkey during 2024 are strong.

Burak Daglioglu pointed out that foreign direct investments in Turkey amounted to $10.6 billion during 2023, with European and Gulf countries leading the foreign direct investments in Turkey.

What are the main pillars of monetary policy in Turkey in 2024?

The monetary policy in Turkey for the upcoming period is based on what was announced by the Central Bank of Turkey, led by its new governor Fatih Karahan, about adopting a tight monetary policy approach until inflation falls to levels consistent with the set targets, according to the statements he made upon taking office.

Karahan said: "We will monitor inflation expectations and pricing behaviors, and we are ready to take necessary measures in the event of any deterioration in inflation expectations."

Which sectors of the economy are expected to grow in Turkey in 2024?

Turkey has seen growth in diversified investment portfolios, especially those related to technology and vehicle manufacturing, defense industries, as well as its significant efforts in drone and military technology manufacturing, agriculture, and the service industry.

Turkey has also made significant progress over its competitors with the growth of electric car production and the tourism sector, as well as in the construction and finance sectors, which increased the GDP in the last quarter of 2023.

These are sectors in which Turkey has achieved high performance indicators in recent years, and these and other sectors are expected to see further growth in the coming period.

Which sectors of the economy are expected to contract in Turkey in 2024?

It is difficult to predict which economic sectors will contract in the coming period of this year, but concerns about rising production costs remain one of the concerns of the industrial sector in some of its fields.

In addition, there are external factors, as mentioned by the founder of Baritrem Consulting, Dr. Ismet Demirkol, in his talk about the reason for the slowdown in growth in the third quarter of 2023 compared to 2022. He attributed this to the Eurozone entering a recession, and since Turkey's exports are mainly to the Eurozone, this affected the growth of GDP in the third quarter of 2023.

How to benefit from the unique opportunities offered by the Turkish economy?

Discussing how to make the most of the promising investment opportunities offered by the Turkish economy could be very extensive, and may require a comprehensive roadmap before delving into its fields. However, we can mention some general tips on this matter, the most important of which are:

The necessity of understanding the Turkish market and expanding knowledge about it. While opportunities may be abundant, ignorance of the open nature of the Turkish market could be a gap in your investment process.

Therefore, you must identify the economic sectors you are familiar with and know how to deal with their tools. It is also important to study and assess risks, as well as seek the help of experts in the economic field you are about to enter. Early and expert consultations may save you effort, money, and many obstacles, such as consulting real estate experts at Imtilak Real Estate, or investment fund experts at Oragon, or trade and import experts at Tebadul Trading... and other important services provided by Imtilak Group through its other companies.

Edited by: Imtilak Real Estate©