Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

Turkey’s Economic Growth Exceeds Estimates despite High Interest Rates

Fri 01 Mar 2024 | 03:12 AM
A local bazaar in Izmir, Turkey.Photographer: Moe Zoyari/Bloomberg
A local bazaar in Izmir, Turkey.Photographer: Moe Zoyari/Bloomberg
Taarek Refaat

Turkey's $1.1 trillion economy has grown much faster than expected, avoiding deflation in two straight quarters during which the central bank implemented the bulk of its massive interest rate rise.

Gross domestic product (GDP) expanded 1% in Q4 compared to the previous three months, according to data published on Thursday. This represents a slight acceleration compared to Q3, when GDP expanded by only 0.3%.

Household spending and investment led to a rebound in Q4 that exceeded the expectations of all but one of Bloomberg's surveys, with the poll’s median estimate being 0.3%.

in 2023, Turkey's economy grew by 4.5%, down from 5.5% in 2022.

The Turkish Central Bank has shifted toward tight monetary policy since last June in an attempt to restrict consumption, which contributes more than half of the GDP. The central bank aims to take measures that would lead to a slowdown in the inflation rate, which worsened during the era of cheap lending.

On an annual basis, the economy performed better than expected in the last quarter, resulting in a 4% year-on-year increase in GDP.  Still it represents a slowdown compared to the upwardly revised growth of 6.1% in Q3.